- Date
- 15 April 2024
Full Disclosure:
Shell expresses openness to leave London
By Jaysen Sutton |
Hi Reader šš½,
The Story
This week, Shellās CEO expressed his openness to move the oil giant from its London listing to a New York listing.
What you need to know for your interviews
Shell is the largest listed company in the UK. Its share price is at the highest it has ever been. And yet the oil and gas company is valued significantly lower than its New-York listed rivals, like Exxon and Chevron. The US, they argue, are more positive about the prospects of oil companies and has a larger market of investors, which has led to this āvaluation gapā between London-listed companies.
Is the UK an attractive place to list? A companyās decision to list or āIPOā is an opportunity to raise funding, provide easier long-term access to capital, and acts as a stamp of credibility. But the market in which a company lists matters; if New York promises more money, more optimism, and higher pay packages for a CEO - why would I list in London?
What does this mean for law firms?
Take a moment to consider: What is important to Shell when it decides to instruct a law firm?
For this story, we might think about expertise in capital markets. If Shell considers a future New York listing, it will want to instruct a law firm with a track record advising on US listings. Think Davis Polk, Latham and and Cooley.
Multijursidictional expertise is one factor. When Shell updated its panel of legal advisers in 2020, the company was looking to strengthen its expertise in markets like Africa, Brazil, Mexico and Asia Pacfiic.
Similarly, oil giants often have to defend against claims. Last year, Debevoise & Plimpton successfully defended Shell in what was one of the worst oil spills off the coast of Nigeria in a decade. The case rested on the six year limitation to bring a claim, under the tort of nuisance, and the judges rejected the claim that the failure to clean up the oil spill could be considered a ācontinuingā cause of action. Mishcon very clearly breaks this down here.
Slaughter and May also successfully defended Shell in a lawsuit brought by a shareholder against the companyās board. ClientEarth attempted to sue Shell on the grounds that it had not effectively responded to the risk of climate change.
Finally, it was reported that law firms had to provide external certifications for sustainability to demonstrate an alignment with the oil giantās ethos. This is a good demonstration for why we talk about the importance of ESG for law firms. It becomes more tangible when clients want to see it.
Have any thoughts? I'd love to hear your perspective below!
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