As it moves to streamline its complex capital structure, Royal Dutch Shell may be considering moving its headquarters to the UK from its current domicile in the Netherlands. There has been no official comment on the possibility but chief executive Ben van Beurden noticeably declined to rule a move out when directly asked during an interview over the weekend.
The question arose in an interview with Dutch newspaper Het Financieele Dagblad. Consumer goods company Unilever, another Anglo-Dutch giant, recently announced that it would merge its UK and Dutch holding companies into one entity based in London and Mr Ben van Beurden was asked whether Royal Dutch Shell might consider the same move. His refusal to rule it out has been seized upon by industry analysts after he commented:
“One always needs to keep thinking. Nothing is permanent and of course we take the investment climate into account. But moving your HQ is not a trivial measure, one should not be too easy about that.”
One of the largest companies in the UK and Europe, with a market capitalisation of around £100 billion despite its share price almost halving on plunging oil prices this year, Shell employs around 80,000 staff globally. Currently the company is headquartered in the Hague but incorporated in London. It also operates a dual share model with listing on both the London and Amsterdam stock exchanges.
A dual capital structure comes with added complications and Shell’s board is believed to have been considering simplifying matters for some time now. London’s greater convenience for institutional investors means that, as was the case for Unilever who had considered Rotterdam as a unified home, it is likely to win out if and when a decision is made.
Shell’s two classes of shares are a legacy of the company’s 2004 reorganisation, with one class for former shareholders of Royal Dutch and the other for those, mainly from the UK, how held stock in the Shell Trading Company. The dual-class complexity was an issue during the £47 billion acquisition of LNG giant BG Group in 2015 and generally makes share issues, buybacks and acquisitions more complex.
The A and B class distinction was originally necessary due to the fact that the Netherlands charges a 15% dividend tax which the UK does not. When the combined company chose the Hague as its headquarters it was under the expectation that the tax would subsequently be abolished. However, in 2018 the Dutch government abandoned those plans under public pressure, with Dutch voters viewing the proposed tax cut as mainly benefiting wealthy foreigners.
Unilever’s change of plans to streamline its capital structure in favour of a UK domicile was seized upon as a vote of confidence in post-Brexit Britain and a similar future move by Shell is likely to be seen in a similar light. The Shell share price is up by just under 2% over Monday-morning trading.
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