Difference Between RDSA and RDSB (With Table)

The Royal Dutch Shell, known as Shell, otherwise, is a multinational oil and gas company founded in 1907 (i.e., the original amalgamation), and later after the British-Dutch partnership in 2005. Its headquarters is situated in The Hague, Netherlands and it is also run as a Public Corporation in the United Kingdom. It is the third-largest corporation in the world, calculated in terms of revenues.

Shell has its part in exploring oil and gas reservations, production of oil, refining and distributing the oil across the globe. It is also involved in the sector of power generation, petrochemicals and trading. The company also works under the trend of renewable energy.

It has its operations extended over 70 countries, with 44,000 service stations all around the world. Its first amalgamation in 1907 was between two rival companies, one of the Dutch, i.e., the Royal Dutch Petroleum Company and the other is of the British, i.e., the Shell Transport and Trading Company Limited. But later on in 2005, the British, as well as the Dutch company, undertook a partnership and started functioning as a single-unit for business purposes.

The company in the stock market is registered as RDSA and RDSB. These are nothing but classifications of the company’s shares. Both shares have similar rights but are distinct in their characteristics.

RDSA vs RDSB

The difference between RDSA and RDSB is that RDSA is linked with the Royal Dutch Shell Company in the Netherlands, whereas, RDSB is linked with the Shell Transport and Trading Company in the United Kingdom.

Comparison Table Between RDSA and RDSB

Parameter of ComparisonRDSARDSB
AssociationRDSA is associated with the Royal Dutch Shell Company, Netherlands. RDSB is associated with the Shell Transport and Trading Company, UK.
CurrencyIt comes under the Dutch tax system, and also the currency to pay here is in Euros. It comes under the UK tax system and the currency to be paid is in Pound Sterling.
Percentage of shares RDSA has control over 57.5 per cent of the total shares of the company. The rest 43 per cent is controlled by the RDSB.
Tax systemIt imposes 15-25 per cent withholding tax on dividends. The shareholders are not subjected to any withholding tax.
Voting powerNo voting power is exercised by the shareholders but they have access to assets, immediately in case of bankruptcy in the company. Although they have voting power, they can have their assets only after the RDSA shareholders receive theirs, in case of a bankruptcy.

What is RDSA?

The Royal Dutch Shell A shares or RDSA shares is a classification of shares of the Royal Dutch Shell Company. It is in association with the original company in the Netherlands itself and is based in Amsterdam. Being listed under the Dutch tax system, it has a Dutch withholding tax of 15-25 per cent on the dividends. The currency used for payment in RDSA is the Dutch currency, i.e., Euros.

RDSA as the A-shares of the company has control over 57.5 per cent of the total shares of the company. Although the shareholders do not exercise any voting power in the company, they have immediate access to the assets or shares if a case of bankruptcy occurs.

In the recent scenario, the shareholders fear bankruptcy due to the pandemic situation. RDSA, in turn, guarantees them the right to access their shares if such a situation arises.

What is RDSB?

The Royal Dutch Shell B shares or RDSB shares is another class of shares of the Royal Dutch Shell Company. It is London based and is in association with the Shell Transport and Trading Company in the UK. It comes under the UK tax system and does not impose any withholding tax on the dividends. The currency used here is the UK’s currency, i.e., Pound Sterling.

RDSB shares have control over the remaining 43 per cent of the company’s total shares. The shareholders exercise voting power but in case of a bankruptcy, they have to wait for the RDSA shareholders to access their assets.

Due to the fact that RDSB shares do not have any withholding tax, many people are organically turned into investing in RDSB. But this advantage also has a price to pay.

Main Differences Between RDSA and RDSB

  1. RDSA is linked with the original company in the Netherlands, while RDSB is linked with the Shell in the UK.
  2. Euros is the currency used in RDSA shares, whereas, Pound Sterling is used in case of the RDSB.
  3. RDSA controls 57.5 per cent, while RDSB controls the rest 43 per cent shares of the company.
  4. There is a withholding tax imposed in case of the RDSA shares, but there is no such tax imposed in the RDSB shares.
  5. RDSB exercises voting power, while there is no such policy in RDSA but they get access to their assets first in a bankruptcy situation.

Conclusion

With globalisation setting in, the influence of the national government is lessening and multinational corporations are increasingly growing day by day. There has hardly been any corporation other the Royal Dutch Shell to have such an accurate examination. Modern globalisation and deregulation have had their effects on the company. It has been a challenge near to impossible for the company to keep its turnovers high.

Shell has secured a primary position on the London Stock Exchange listing. It is by far the largest of any company that is listed on the LSE. So, it has the privilege of being on the top. Also, eyeing the present scenario of the pandemic, the company has decided to cut its dividends because of the reduction in oil demand.

Coming to the RDSA and RDSB shares, both are traded in the three stock exchange centres, i.e., London, Amsterdam, and New York. They follow the Divide Access Mechanism of the company. Both types of shares come with their list of advantages and disadvantages. This affects the total investment made and decisions taken in the Stock Exchange.

References

https://www.tandfonline.com/doi/abs/10.1080/13563460307169?journalCode=cnpe20

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