Daily Telegraph: Britons gain upper hand in Shell rejig

Daily Telegraph: Britons gain upper hand in Shell rejig

By Christopher Hope, Business Correspondent (Filed: 20/05/2005)

Shell’s British shareholders are likely to take a majority holding in the oil and gas giant for the first time in 100 years as a result of the company’s plans to simplify its dual listing next month.

The Anglo-Dutch company yesterday formally laid out its plans to unify its structure in the wake of the company’s annus horribilis last year when it admitted that it had exaggerated its proven reserves by 25pc. Shell’s current structure, in which the company is 60pc-40pc owned by Royal Dutch investors in the Netherlands and Shell Transport and Trading shareholders in the UK, dates from 1907.

Under the plans, the investors will be given two classes of shares, A and B, split along the current 60-40 proportions, in a new company called Royal Dutch Shell, which has its main listing on the London Stock Exchange.

The company has already pledged to spend between $3billion and $5billion on share buy backs this year. Yesterday Shell said it would focus on the A shares because they are between 3.5pc and 4pc cheaper as holders are liable for Dutch withholding tax.

Shell admitted this would lead to the Dutch share majority being diluted. Historically, some British investors complained that Dutch shareholders had more influence because of their 60pc holding.

One source close to the company said: “Nothing would please us more than having tax rates harmonised so we could have one class. The two shares are economically identical. From the company’s perspective this is not an issue. We are not buying back B shares because investors would rather have them.”

Shell also confirmed that as a result of the unification, any Briton holding Royal Dutch shares would be liable for capital gains tax. Shell said it had no idea how many UK residents held shares. However, one source said: “It is a UK tax issue. No UK resident should hold shares in Shell Transport. If they do they have been badly advised.”

Shareholders will vote on the changes on June 28 and trading in the A and B shares starts on July 20. Jeroen van der Veer, Shell’s chief executive, said the company had been “encouraged by the widespread support of shareholders since the unification proposals were announced in October last year. We remain firmly on track for the completion of the transaction in July”. Shares in Shell Transport closed up 1 at 473p.

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