Financial Times: Shell offers way out of tax glitch: “Royal Dutch Shell has belatedly found a solution to a problem that had created an immediate capital gains tax liability for some of its UK private shareholders.”: “There would be no compensation for shareholders who had already tendered their shares, Shell said.”: Wednesday 21 Sept 2005
By Clay Harris
Published: September 21 2005
Royal Dutch Shell has belatedly found a solution to a problem that had created an immediate capital gains tax liability for some of its UK private shareholders.
UK holders of Royal Dutch, one of the predecessor companies to the unified oil and gas group that was created in July, will now be offered a loan note alternative to the share exchange that was the basis of the original transaction.
That will allow any CGT liability to be deferred, although it comes too late for any investors who have already accepted the original offer.
The change marks a victory for the Association of Private Client Investment Managers and Stockbrokers, which had campaigned for a mechanism that did not create CGT liability for individual UK shareholders in Royal Dutch.
The problem had not affected any shareholders in Shell Transport & Trading, the UK company before unification, or institutional holders of Royal Dutch.
"We are absolutely delighted for those refuseniks who have held out against the pressure to accept Shell's offer," Kevin Sloan of Apcims, said yesterday.
Angela Knight, Apcims chief executive, said: "It's certainly a great improvement. It's a pity it couldn't have been done at the start." Shell had previously held out little prospect of relief, emphasising that it was treating all shareholders worldwide equally on a pre-tax basis.
Apcims said that it knew of at least 350 people who had not accepted the original offer, but that others had given in. As many as 3,000 shareholders may have been affected, although the number was uncertain because the securities were bearer shares, not registered in individual names.
Shell said yesterday that the loan note alternative was a by-product of a review and tidying up of its corporate structure.
Royal Dutch will be merged into Shell Petroleum NV, another subsidiary, and outstanding shareholders will be offered cash or, in the case of UK shareholders who choose to do so, loan notes that will be exchangeable into Royal Dutch Shell shares.
There would be no compensation for shareholders who had already tendered their shares, Shell said.
Overall, holders of 98.5 per cent of Royal Dutch shares have accepted the original offer.
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