Dutch fury after Shell announces plan to change name and shift headquarters to UK

The Netherlands says it is 'unpleasantly surprised' by the news

Royal Dutch Shell unveiled plans on Monday to shift its headquarters from the Netherlands to the UK, a move that will result in it ditching its current dual structure.

The company also wants to drop “Royal Dutch” from its name – a part of its branding since 1907 – relocate its tax residence to the UK and move its top executives from The Hague to London.

The British-Dutch energy company said the decision to walk away from the Netherlands would make it nimbler as it moves away from oil and gas and towards renewable sources of power.

Shell chairman Sir Andrew Mackenzie said a “a simpler structure” will allow the company to speed up the delivery of its new strategy.

“At a time of unprecedented change for the industry, it is even more important that we have an increased ability to accelerate the transition to a lower-carbon global energy system,” said Mr Mackenzie.

The Netherlands immediately said it was “unpleasantly surprised” by the news.

“Shell informed the Cabinet about this intention yesterday,” the country's Minister for Economic Affairs and Climate Policy, Stef Blok, said.

“The government deeply regrets that Shell wants to move its head office to the UK.”

Shell’s decision to adopt a simplified structure has been on the agenda for a number of years.

However, the company’s relations in the Netherlands, its country of origin, have become increasingly fraught of late.

Dutch pension fund ABP said last month it would drop the oil company – and all fossil fuels – from its portfolio without warning, while a court in The Hague ruled in May that the company must slash its emissions harder and faster than planned.

“The simplification will normalise our share structure under the tax and legal jurisdictions of a single country and make us more competitive,” Mr Mackenzie said.

“Shell will be better positioned to seize opportunities and play a leading role in the energy transition.”

The company has been incorporated in the UK with tax residence in the Netherlands and a dual share structure since the 2005 unification of Koninklijke Nederlandsche Petroleum Maatschappij and Shell Transport & Trading Company.

It was not envisaged at the time that the particular share structure would be permanent, the company said.

The company now expects to become Shell Plc, subject to shareholder approval, while chief executive Ben van Beurden and chief financial officer Jessica Uhl will relocate to the UK, where all executive and board member meetings will now take place.

Shell will retain its listings in London, Amsterdam and New York. Shareholders will be given the opportunity to vote on the changes by December 10, with the shake-up taking effect next year if approved.

Although the Netherlands is famously business-friendly, Prime Minister Mark Rutte has had to act on growing sentiment that companies do not give back enough.

The Anglo-Dutch company has been in a long-running tussle with the Dutch authorities over the country's 15 per cent dividend withholding tax, which Shell sought to avoid paying with its two share classes. Its new structure would resolve that issue.

As is the case with its European peers, Shell has embarked on a multidecade strategy to rein in its emissions, in part by selling more low-carbon fuels.

But its approach to the energy transition is struggling to gain traction. Before its earnings report last month, activist investor Dan Loeb revealed his fund Third Point had taken a $750 million stake in Shell and was pushing to break up the company.

Third Point’s position came to light a few days after long-time Shell ally ABP said it would divest €15 billion ($17.2bn) of fossil-fuel assets by early 2023, including its holdings in the energy company.

The pressure comes on top of legal challenges, with Shell appealing a Dutch court verdict from May, which said the company must cut its emissions 45 per cent by 2030.

“The simplification will have no impact on legal proceedings related to the Dutch court ruling,” Mr Mackenzie said.

The company has already expanded its carbon-reduction targets.

Updated: November 15th 2021, 12:35 PM
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