Avoid shelling out – a short cautionary tale for public companies and those who advise them
Earlier this week the oil giant, Royal Dutch Shell announced plans to move its head office from the Netherlands to the UK and drop the “Royal Dutch” part of its name.
So, Royal Dutch Shell wanted to change its name to Shell PLC.
However, a company registered to an address in Essex, which had apparently been dormant (non-trading) since 1997, had the name Shell Limited. Without the cooperation of the dormant company the old giant would not be able to be renamed Shell PLC because two companies cannot share the same name at Companies House.
Companies House records show that in October 2021, the oil giant acquired the dormant company, thus enabling the change of name announced this week. We do not know what price, if any, Shell paid.
It’s doubtful that we will ever know the full story here. The people behind the dormant company do not appear to have done anything wrong – they just maintained a true ‘shell company’. As with holding domain names, holding a company name is not necessarily something that can lead to a legal complaint.
The situation could have been very different, though – what if the dormant company had been set up only in response to an RNS announcement announcing Royal Dutch Shell’s intention to change its name? That is what the notorious Duncan McDonald of Cardiff has done over the years with his dishonest schemes of waiting for RNS announcements before registering dozens of company names in order to hijack / block companies and then force them to “shell out” for their announced new name. In these cases, Mr McDonald takes advantage of weaknesses in the legal system and demands payment for the transfer of the chosen company name.