You are here:

Royal Dutch Shell share classes

Created:
16 April 2008
Written by:
Robert Ansted

"For many years I held shares in Shell Transport and Trading, then in 2005 they were converted into Royal Dutch Shell 'B' shares. In September last year I purchased further shares in Royal Dutch Shell, but these turned out to be 'A' shares (I didn't recall that I had the option to purchase 'A' or 'B' shares at the time). Each quarter I now get two dividend statements and two separate dividend payments. Why does Royal Dutch Shell have two classes of shares? And why can't I merge my two separate holdings into one?"

Advertising

Robert Ansted, statistics editor, replies: On 20 July 2005, the unification of Royal Dutch Petroleum and Shell Transport and Trading took place. The result was the creation of a unified company called Royal Dutch Shell. The previous twin holding company structure had existed since 1907 and the balance of Anglo-Dutch power was 60:40 in favour of the Dutch. Once unification took place, the new company had two classes of shares - 'A' and 'B'.

There are now only a handful of companies left on the UK market with two or more classes of capital. Each class generally has different rights attached to them regarding their voting or conversion rights or preferential treatment in the payment of dividends. The recent trend has been to make life less complicated by enfranchising the different classes into one single class of capital. Two-tier structures were often created to allow family members to keep total control over the running of the company by issuing to the general public a second class of non-voting shares.

Royal Dutch Shell's 'A' and 'B' shares have identical rights attached to them and are both traded on the London Stock Exchange and Euronext Amsterdam. They also trade in the form of ADRs on the New York Stock Exchange. The only difference between the two classes is that 'A' shares have a Dutch source and 'B' a UK source. Dividends paid on Class 'A' ordinary shares have a Dutch source for tax purposes and are subject to a 15 per cent Dutch withholding tax. They are also generally paid in euros. Holders of 'B' shares are entitled to a UK tax credit and the dividend is paid in sterling - although the payout is based on what has been declared in euros, converted to sterling.

Unfortunately, due to the different tax applications of the two classes it is impossible to merge your holdings together into one single class of shares. The only way around the problem is to sell one class and then repurchase the other. There is generally little difference in the price, as you would expect from such a large company.

Useful contacts

Royal Dutch Shell Investor relations: 020 7934 3856; Registrar Equiniti: 0800 169 1679.

ANY OTHER QUESTIONS...

Send us your investment questions to ic.questions@ft.com. Please note that we cannot provide individual investment or tax advice.

  • Back to top

Products and Services from Barclays Stockbrokers.

The UK’s No.1 Stockbroker

Stocks and Shares

Contracts for Difference

Financial Spread Trading

Gilts and Bonds

Funds Market

FX

Education Centre

Trading Simulator

Advertorial Feature

Spread your risks with spread trading

With so many big moves in the world's financial markets, there have seldom been more opportunities around for spread traders. Isn't it time you joined them?

by Dominic Piccarda