Energy major Royal Dutch Shell has moved to simplify the company’s share structure as part of a push to accelerate its transition to a net-zero company, Report informs referring to OffshoreEnergy.
As a result, the company will also remove the Royal designation from its name.
Under the proposal, Shell intends to change its share structure to establish a single line of shares, which is simpler for investors to understand and value. The company will also align its tax residence with its country of incorporation in the UK.
Shell has been incorporated in the UK with Dutch tax residence and a dual share structure since the 2005 unification of Koninklijke Nederlandsche Petroleum Maatschappij and The Shell Transport and Trading Company under a single parent company. It was not envisaged at the time of unification that the current A/B share structure would be permanent.
As explained by Shell, its conventional single share structure will allow it to compete more effectively. It will allow for an acceleration in distributions by way of share buybacks, as there will be a larger single pool of ordinary shares that can be bought back. Following the start of a $2 billion buyback program in July, Shell announced in September that it will return an additional $7 billion to shareholders following the completion of the sale of its Permian assets in the United States.
Following the proposed change, Shell expects it will no longer meet the conditions for using the Royal designation in its name. As a result, subject to shareholder approval of the resolution, the board expects to change the company’s name from Royal Dutch Shell plc to Shell plc.