Shell to Shift Tax Residence to U.K.

Royal Dutch Shell (RDS.A)  has proposed to simplify its share structure by eliminating its A and B class shares and establishing a single line of shares. It also plans to shift its tax residence and country of incorporation from the Netherlands to the United Kingdom. Authorization of its restructuring plans will require at least 75% shareholder approval. If the resolution passes, Shell will be fully incorporated in the U.K. and move its headquarters there along with its CEO and CFO. As a result, the company is likely to drop “Royal Dutch” from its name and be known simply as Shell.  

Shell’s dividend policy remains unchanged, but by shifting its tax residence to the U.K., dividends on ordinary A shares will no longer be subject to the 15% Dutch dividend withholding tax. Shell expects the new structure will allow it to accelerate share buybacks by creating a single pool of ordinary shares.

Management also claims that the changes will also help it better manage the energy transition, but we do not see any meaningful impact. The change is also unlikely do anything to shield the company from recent lawsuits over emissions. As such, our financial forecast, strategic outlook, fair value estimate, and moat rating remain changed.