Morningstar

Shell to Shift Tax Residence to U.K.

The company also plans to scrap its dual share structure.

Securities In This Article
Shell PLC
(RYDAF)
Shell PLC ADR (Representing - Ordinary Shares)
(SHEL)

Royal Dutch Shell RDS.A RDS.B 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.

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About the Author

Allen Good, CFA

Director
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Allen Good, CFA, is a director, Europe, for Morningstar*. Based in Amsterdam, he covers the oil and gas industries as well as manages a team of multi-industry analysts. He is also chair of the Morningstar Research Services Economic Moat Committee, a group of senior members of the equity research team responsible for reviewing all Economic Moat ratings issued by Morningstar. In this role, he is responsible for ensuring consistent application of Morningstar’s Economic Moat methodology across sectors and regions as well as updating and revising the methodology. His specialty is global integrated oils such as Exxon, Chevron and Shell and US independent refiners such as Valero and Marathon Petroleum. He also contributes to developing hydrocarbon price and petroleum product margin forecasts used in valuation models.

Before joining Morningstar in 2008, He performed merger and acquisition advisory work for a middle-market investment bank. Before that, he spent several years at Black & Decker in various operational roles, primarily focused on manufacturing and distribution.

Good holds a bachelor’s degree in business from the University of Tennessee and a master’s degree in business administration from Kenan-Flagler Business School at the University of North Carolina. He also holds the Chartered Financial Analyst® designation.

* Morningstar Holland BV (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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