Shell plans to shift group HQ to London

Oil giant Royal Dutch Shell has announced plans to relocate its global headquarters from the Netherlands to the UK in a move welcomed in London, but which has left the Dutch government "unpleasantly surprised".

Image of Shell oil tanker poised to leave

David Sapsted

15 November 2021

The move, which is aimed at simplifying the corporate structure and which will have to be approved by shareholders next month, would see senior executives at the company, including Chief Executive, Ben van Beurden, move to its London HQ.It is not known how many other workers in the Netherlands will have to relocate.

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'Clear vote of confidence'

Shell, which will lose "Royal Dutch" from its name when it moves, also plans to scrap its dual share structure, which divides stock into A and B classes, though it will continue to trade in the Amsterdam, London and New York markets.The company said the simplified share structure would mean it would be able to accelerate shareholder distributions through, for example, share buy-backs.UK Business and Energy Secretary, Kwasi Kwarteng, welcomed Shell's announcement, commenting that it was "a clear vote of confidence in the British economy".But Stef Blok, the Dutch Economic Affairs and Climate Minister, said the news had come as an unpleasant surprise, adding: "We are in a dialogue with the management of Shell over the consequences of this plan for jobs, crucial investment decisions and sustainability."

Major presence maintained in The Netherlands

In May, a court in the Netherlands ruled that Shell must reduce its emissions by 45% by 2030, after a case brought by brought by environmental groups. In the summer, Shell confirmed it would appeal against the ruling, which only applies in the Netherlands.The company said it was making the move to streamline its corporate structure, adding: "Shell is proud of its Anglo-Dutch heritage and will continue to be a significant employer with a major presence in the Netherlands."Its projects and technology division, global upstream and integrated gas businesses and renewable energies hub remain located in The Hague.On ditching the "Royal Dutch" part of its name, Shell said: "Carrying the Royal designation has been a source of immense pride and honour for Shell for more than 130 years. However, the company anticipates it will no longer meet the conditions for using the designation following the proposed change."

Simplified share structure

Stuart Joyner, a partner at finance brokers Redburn (Europe), described Shell’s announcement as "a clear post-Brexit win" for the UK and a welcome move to unify the company’s share structure."It will allow faster buy-backs and bring Shell’s tax residency into line with its country of incorporation in the United Kingdom, where it will hold board and executive committee meetings, and base senior management," he said."This is a clear post-Brexit win for the UK. It is unclear what leaving the Netherlands will mean for the Dutch litigation process given sizeable operations will remain."Laura Hoy, an equity analyst at Hargreaves Lansdown, said the HQ relocation would not greatly affect affect investors."The long-term growth story for Shell still rests heavily on the oil price," she said. "For now, buoyant oil prices are keeping the group's cash coffers topped up."However, with the inevitable shift to more sustainable energy picking up steam, we suspect the need to invest in greener operations will keep a lid on what the group can pass on to shareholders."