Shell to relinquish its ‘Dutch’ identity

Royal Dutch Shell plc (LON: RDSB) wants to move out of the Netherlands and set up its tax head office in the United Kingdom, the oil giant announced on Monday.

Shell will scrap its dual share structure

Shell also said it will dissolve its long-held dual share structure and remove “Royal Dutch” from its name. The announcement comes as a massive blow to the Netherlands that has already lost Unilever last year.

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For Shell to implement the proposed changes, it’ll need at least 75% of its shareholders to vote in favour at a general meeting on December 10^th.

The news comes weeks after Daniel Loeb’s Third Point took an equity stake worth $500 million in Shell and recommended the company split into two; one focused on its legacy business and the other on clean energy products.

Reasons why Shell is leaving the Netherlands

The multinational oil and gas company is shifting from the Hague for two main reasons; first is to break free from the strict tax regulations, and the second is to avoid excessive pressure from the Dutch government to decarbonize its operations faster than it had planned.

A 15% dividend withholding tax on the Netherlands-listed shares of Shell is a turn off for international investors. But now that it’ll have to abide by the British rules only, such a tax would no longer be an issue.

Shell is the biggest, one of the oldest Dutch companies, and so, the government of the Netherlands would want to tip the scales back in its direction. To that end, the parliament is scheduled for a meeting later today to see if the dividend tax can be removed.

But that’s not all that Shell is after. The simpler structure will also make it easier to sign M&As and ease restrictions from its ability to buy back shares. The oil firm might also have been put off by ABP’s (the biggest Dutch state pension fund) announcement in October that it was dumping its entire equity in Shell.