LONDON: Energy giant Shell yesterday announced plans to switch headquarters from the Netherlands to the UK and drop Royal Dutch from its name in a major shakeup that angered the Dutch government. The plan, hailed by UK Business Secretary Kwasi Kwarteng as “a clear vote of confidence in the British economy” post Brexit, will see Shell switch its tax residence and top executives to Britain. The move deprives the Netherlands of its biggest company, which has for more than 130 years been a symbol of Dutch entrepreneurial spirit and is headquartered in The Hague.
“We are unpleasantly surprised by this. The cabinet deeply regrets this intention,” Dutch Economic Affairs Minister Stef Blok said on Twitter. “We are in talks with Shell about the implications of this move for jobs, critical investment decisions and sustainability. Those are hugely important,” Blok added. The Dutch business association VNO NCW said: “This is a huge bloodletting for the Netherlands.”
Shell in a statement said the changes were designed to strengthen the company’s “competitiveness and accelerate both shareholder distributions and the delivery of its strategy to become a net-zero emissions business”. It insisted that “the simplification will have no impact on” a Dutch court ruling that the company slashes greenhouse gas emissions. The legal decision this year was a landmark victory for climate activists, while yesterday’s announcement comes after activist investor Third Point demanded Shell be broken up, bolster low-carbon investment and return more cash to shareholders.
The proposals “will normalize our share structure under the tax and legal jurisdictions of a single country and make us more competitive”, said Shell chair Andrew Mackenzie. “As a result, Shell will be better positioned to seize opportunities and play a leading role in the energy transition,” he added. Shareholders will vote on the planned changes at a meeting in the Netherlands on December 10.
Shell said it plans to relocate to the UK its chief executive Ben van Beurden and chief financial officer Jessica Uhl. The company has been incorporated in the UK with Dutch tax residence since the 2005. This followed the unification of Koninklijke Nederlandsche Petroleum Maatschappij and The Shell Transport and Trading Company under a single parent company.
Shell said in yesterday’s statement that it “is proud of its Anglo-Dutch heritage and will continue to be a significant employer with a major presence in the Netherlands”. The company said its projects and technology division, global upstream and integrated gas businesses and renewable energies hub would remain located in The Hague. Shares will continue to be listed in Amsterdam, London and New York, it added.
Shell’s shakeup comes as the company faces increased pressure from activists on how the company is run as the world moves to net zero emissions targets. The largest Dutch pension fund, ABP, last month said it would stop investing in all fossil fuel companies. It comes after Daniel Loeb, founder of New York-based hedge fund Third Point, took a stake in Shell to demand change. “Third Point called for a break-up of Shell into several entities and there is no hint of such a strategy in the announcement” Monday, noted Russ Mould, investment director at AJ Bell.
“Having one legal and tax domicile can increase speed of movement by reducing legal and financial complexity when it comes to acquisitions, disposals, cash returns to investors or fundraisings,” he told AFP. Shell’s plans come also after consumer goods giant Unilever became a wholly British company at the end of the last year after it completed a merger of its Dutch and British corporate entities. Prime Minister Mark Rutte two years ago dropped plans to scrap a tax on dividends for big companies, an issue that was at play with Unilever.
At the same time however, Amsterdam’s stock exchange has gained on London’s financial hub following Brexit. – AFP