Ben Van Burden is on the move. The CEO of Shell said yesterday that he would propose moving the headquarters and corporate tax residence from the Netherlands to the UK.
This comes after Unilever decided in 2020 to locate its headquarters in the United Kingdom. But she was dismantling her dual possessions. Shell did so already in 2005, when it chose the UK for its corporate base and main listing, while its tax residence and headquarters were in The Hague. To prevent non-Dutch shareholders from having to pay withholding tax in the country, Shell issued them B shares; Investors from the Netherlands received A shares.
Shell complains of being a nuisance. That didn’t stop him from completing a €60 billion deal on Britain’s BG Group in 2016. However, the deal complicates the buyback of shares, as the buyback of A shares involves the payment of Dutch withholding tax. As Van Beurden returns capital to shareholders with the help of higher oil prices, the number of B shares goes down.
Re-adjustment can also pay off in the face of an energy shift. Van Beurden hasn’t set targets for wind, solar or reduced oil production, which means it may at some point need to scale up in a growth region like hydrogen. It would be easier to achieve this with one class of stock. So does merging with a competitor such as BP and deploying fossil fuels, as suggested by activist Dan Loeb. In addition, there is a recent ruling by a Dutch court that demands Shell cut its annual emissions by 45% by 2030. The company says it will do so regardless of headquarters.
Exit and loss of label fact (Royal) You will make a few friends on your advice. But the Dutch government is in a post-election stalemate, as is the parliamentary proposal to tax leaving groups, so the downsides, for now, appear limited. Also, given the way Shell has dealt with the authorities, they may not care much if someone is offended.
The authors are columnists for Reuters. opinions are yours. The translation of Carlos Gomez Abajo is the responsibility five days
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