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Investors to decide about Royal Dutch/Shell merger

Royal Dutch/Shell investors were to vote yesterday on a historic merger of the energy giant's two holding companies, after a group crisis caused by the miscalculation of its oil and gas reserves.

At separate annual general meetings in The Hague and London, shareholders were expected to back an overhaul of 100-year-old group's corporate governance structures, via unification of Royal Dutch Petroleum and the UK arm, Shell Transport and Trading.

The Anglo-Dutch group, the third-biggest oil company in the world by market capitalization, announced last October plans to move to a more traditional single-board structure with one chairman and one chief executive, scrapping its current dual-board arrangements based in the UK and the Netherlands.

Investors welcomed the prospect of a merger with Shell rallying 2.13 percent to ?5.3925 (US$9.82) in London trading, while the capital's FTSE 100 index of leading shares added 0.63 percent to 5,075.10 points. In Amsterdam, Royal Dutch gained 1.98 percent to 54.05 euros (US$65.45).

"We view the proposed governance structure positively, as a unified board structure should provide more efficient channels of communication and decision-making processes," said Tim Sawyer, chief executive of RREV, which serves the corporate governance needs of UK-based institutional investors.

"The simplified board structure will also be more transparent and accountable to both shareholders of UK and Dutch stock. The renewed plans are an improvement on the existing arrangements and the structure is more aligned to best practice and our guidelines," he added.

Under the new structure, Royal Dutch/Shell will have a primary stock market listing in London and a secondary listing in the Netherlands, where the group will also be headquartered and pay taxes. Trading of the new company's shares would begin on July 20.

Unification, meanwhile, would lead to the FTSE 100 index of leading shares becoming far more sensitive to price moves in the oil market, as the weight of Shell stock traded on the London stock market would sharply increase.

Royal Dutch/Shell has struggled to win back investors' trust after admitting between January last year and February this year that it had overstated its proved reserves of oil and gas by almost 6 billion barrels, and that senior executives were aware of problems long before they were made public.

The group's present structure dates back to 1907 from the merger of Royal Dutch, formed in the Netherlands to develop oil fields in Asia, and Shell.
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