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Last Updated: Tuesday, 20 September 2005, 15:20 GMT 16:20 UK
Shell buys out Dutch shareholders
Shell logo outside petrol station
The unification was Shell's biggest overhaul in its 100-year history
Oil giant Shell is planning to buy out remaining shareholders in its former Dutch holding company following the unification of its shares this year.

Shell holds about 98.5% of Royal Dutch following its unification with Shell Transport & Trading.

Shareholders will receive cash or loan notes exchangeable for Shell shares.

Shell's move is good news for about 400 UK investors who previously refused to sell their shares because they would have to pay 40% capital gains tax.

To enable the new buyout plans, the company said it would merge Royal Dutch into a subsidiary, Shell Petroleum NV.

Tax trap

The company's offer of a loan note means the shares can be exchanged for new "A" shares in the company without any tax implications.

There is no reason why Shell could not have done this at the start and if they had, then it could have saved a lot of heartache
Angela Knight, APCIMS

But at least 1,700 residents in the UK were not so fortunate because they decided to sell their shares after the merger was announced.

They had to pay capital gains tax even though Dutch and US investors paid nothing at all.

"There is no reason why Shell could not have done this at the start and if they had, then it could have saved a lot of heartache," said Angela Knight, chief executive of the Association of Private Client Investment Managers and Stockbrokers (APCIMS).

"It's a victory for those who refused the offer because it would leave them with a huge tax bill."

Shell linked its UK and Dutch arms in a bid to restore confidence after a damaging reserves scandal last year.

The scandal was partly blamed on the complicated management and ownership structure.


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