London Evening Standard: Shell may have single London base

James Rossiter,

20 April 2004

SHELL is considering creating a single global corporate headquarters in London under a radical streamlining of its corporate governing structure.    

Such a dramatic end to 97 years of power-sharing between Holland and the UK could come from an outright takeover by London-listed Shell Transport & Trading of Amsterdam-listed Royal Dutch/Shell, leaving one set of Shell shares traded on the London Stock Exchange.

The plan is the most extreme endgame understood to be on the cards as part of a complete review of Shell's cumbersome ownership structure in the wake of the scandal surrounding over-stated oil and gas reserves.

Its conclusions are due to be given at the delayed annual general meeting in June. Royal Dutch is, however, thought to be pitching the case for having the Dutch board 'on top' in any revamped holding structure.

As part of the review, Shell in London is looking hard at changing its dual-listed structure to the Unilever model which is also used by Anglo-Australian miner BHP Billiton, Anglo-South African investment bank Investec and Anglo-American cruise operator Carnival. They have a single board of directors which takes full responsibility for everything that happens in the different countries' operating companies. A contract between the operating companies means they share in profits and losses alike.

A special voting scheme means shareholders can vote in each other's meetings, 'creating true economic merger at parent company level,' said an industry insider.

Shell, with headquarters in London and Amsterdam, effectively has its Dutch and UK arms overseen separately with both feeding into a committee of managing directors 'acting more like a joint venture than a dual-headed company like BHP,' the insider said.

Moving to an outright takeover may still be an easier way for Shell to achieve a single board, according to insiders, than changing its to a BHP-style dual-headed structure as insiders are grappling with the problems of Dutch companies' split boards.

Royal Dutch has a management board answerable to a supervisory board, equivalent to UK non-execs, and headed by former ING chairman Aad Jacobs.

Royal Dutch is likely to push to be in charge of any unified company, placating UK investors with the promise to get rid of its supervisory board.

Joachim Fluery of lawyers Clifford Chance said: 'Dutch law exempts international companies with most employees based outside Holland from having supervisory boards at a holding company level. Dutch directors could still be 'on top' - perhaps a more flexible option than having the British.

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