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Shell to move headquarters to U.K., revamp share structure and drop ‘Royal Dutch’

The oil giant says the moves will make it more competitive and better position its transition to a cleaner energy company

Royal Dutch Shell plans to move its headquarters from the Netherlands to Britain and drop its dual share structure, part of a strategy that company executives say will advance its “net zero emissions” goals. (Kirsty Wigglesworth/AP)

Royal Dutch Shell plans to move its headquarters to Britain, simplify its share structure and change its name as part of an overhaul that executives say will better position the oil and gas giant’s transition to a cleaner energy business.

In the plan announced Monday, Shell would move its tax residence from the Netherlands to the United Kingdom, which has a substantially lower corporate tax rate, and free it from a dividend tax that many investors saw as onerous. It also would erase “Royal Dutch” from its name and become Shell Plc.

The moves come as the energy giant, and the world at large, is under growing pressure to reduce its carbon footprint. In May, a Dutch court ordered Shell to slash greenhouse gas emissions at a significantly faster pace than planned.

“At a time of unprecedented change for the industry, it’s even more important that we have an increased ability to accelerate the transition to a lower-carbon global energy system,” board chairman Andrew MacKenzie said in a statement. “A simpler structure will enable Shell to speed up the delivery of its Powering Progress strategy, while creating value for our shareholders, customers and wider society.”

Investors seemed to embrace the plan, sending Shell’s shares up about 2.5 percent in Monday trading.

But the Dutch government was “unpleasantly surprised,” according to a tweet by the Ministry of Economic Affairs and Climate Policy, prompting a scramble from some policymakers to try to change company officials’ mind.

The blueprint, which is subject to shareholder approval, would end the framework that made Shell a child of both nations. The oil giant traces its corporate roots to 19th-century England, when a small London-based import-export business began hiring steamers to carry oil through the Suez Canal and elsewhere. To better compete with Standard Oil of the United States, it merged with a Dutch rival to create the Royal Dutch Shell Group in 1907.

Shell is under court order to bring greenhouse gas emissions 45 percent lower than 2019 levels by 2030 in alignment with the Paris climate accord. While the company has said it would appeal, the issue comes with growing urgency. World leaders at the recently ended COP26 summit in Glasgow, Scotland, came to an agreement meant to strengthen near-term climate targets and move the planet away from fossil fuels more quickly.

Shell spokeswoman Natalie Gunnell told The Washington Post via email that the company’s plan “will have no impact on legal proceedings relating to the climate ruling or any other legal proceedings currently in progress in The Netherlands.”

She added that the company has committed to halving its emissions by 2030 compared to its 2016 levels, and has incorporated those targets into its 2022 business plan.

Shell also has been hearing from investors: Last month, Third Point LLC took a $750 million stake and called for spinning off Shell’s legacy extraction and refining operations from renewables and liquefied natural gas.

According to Dan Loeb, the billionaire investor leading the Wall Street hedge fund, Shell’s struggles are a result of “incoherent” strategy, failing to please both those who want the oil giant to transform its business for a low-carbon future and those who want it to reap the rewards from the waning days of legacy oil and gas.

“As the saying goes, you can’t be all things to all people,” he wrote in a letter to investors. “In trying to do so, Shell has ended up with unhappy shareholders who have been starved of returns and an unhappy society that wants to see Shell do more to decarbonize.”

If the new structure is approved, it would bring sizable tax benefits. The United Kingdom has a substantially lower corporate tax rate, 19 percent to the 25 percent rate in the Netherlands.

Shell currently trades as separate A and B shares, a relic of the company’s merger more than 100 years ago that subjected some of them to a 15 percent Dutch dividend tax. But moving to a single entity would eliminate that liability altogether.

The company said the plan, which goes before shareholders at a Dec. 10 meeting, requires the approval of at least 75 percent of the votes.

Hours after the announcement, the Dutch government launched a last-minute bid to abolish the dividend tax, the Financial Times reported.

According to the report, Economic Minister Stef Blok and Tax Minister Hans Vijlbrief plan to raise the possibility of scrapping the tax with Dutch lawmakers on Tuesday. Previous attempts to abolish it faced fierce opposition from environmental groups.

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