Product details

In January 2004, Royal Dutch/Shell (Shell), the third largest oil exploration and production company in the world, announced that its financial statements had shown inflated oil reserves in the earlier years, and that it would downgrade nearly four billion barrels of its proven oil and gas reserves. This announcement created a furore among the investors and industry analysts who blamed the complex and opaque twin-board governance structure for the company?s problems. Experts believed that this structure lacked accountability and facilitated financial manipulations. The case study examines in detail the twin-board governance structure of Shell and the loopholes in such a structure. In order to restore investor confidence, Shell announced a merger of the Royal Dutch/Shell group of companies under a single parent company, in October 2004. The case highlights the key proposals and examines the pros and cons of this merger plan. The case is structured to encourage students to: (1) conduct an in-depth study on the twin-board governance structure of Royal Dutch/Shell; (2) examine how the twin-board governance structure of Shell resulted in lower accountability and transparency; (3) study the circumstances that necessitated organisational restructuring at Shell; (4) examine the solution of merging the Royal Dutch/Shell group of companies under a single parent company; and (5) analyse the pros and cons of the proposed solution. The case is aimed at MBA/PGDBA students as part of the strategy and general management curriculum.