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Governance pays at Shell

The planned reshuffle of the management structure at Royal Dutch/Shell, the multinational oil group which had until recently operated a dual management structure for the past century, has been hailed a success by S&P's Governance Services. Instead of two management entities ? one based in the UK, the other in the Netherlands ? Shell will create an ultimate parent company which will be incorporated in the UK and headquartered with tax residence in the Netherlands.

The reorganisation is a result of the debacle surrounding the figures for Shell's proven oil reserves ? or otherwise ? which led to the departure of Chairman Sir Philip Watts and CFO Judy Boynton. A final decision on the restructuring will take place at a number of AGM's in 2005.

Shell's dual corporate structure, says S&Ps, had created unwanted issues around the complexity, opacity and lack of accountability that contributed to the restatement of Shell's oil reserves seen earlier this year. Nor will the recent restructuring guarantee transparency in the future.

According to S&P's: ?Although Shell's corporate governance is expected to improve following the proposed changes, in the short term further possible reserve restatements ? a legacy from past practices ? could lead to a lowering of the long-term corporate credit rating.?

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