Dissolution of the Stichting
Information on 3rd Distribution
11 November 2011, Important information on distribution
12 September 2011, Update Distribution Process
Shell Settlement amounts expected to be distributed NOT before November 2011
Press release Amsterdam Court of appeals declares shell settlement binding
Without admitting any wrongdoing, Shell 1) agreed to pay $352.6 million, plus administrative costs, to investors covered by the settlement. They include non-US investors who both resided and purchased their shares outside the United States from April 8, 1999 until March 18, 2004 (the "Covered Investors"). The parties to the settlement agreement include certain institutional investors including ABP, PGGM, the Vereniging van Effectenbezitters (VEB) an organization representing individual shareholders in The Netherlands and similar organizations, and the Shell Reserves Compensation Foundation (the Foundation), a settlement foundation representing all shareholders covered by the settlement agreement.
The agreement depends on the Amsterdam Court of Appeals declaring the settlement binding for all of the shareholders that it covers and is subject to agreed opt-out provisions. The parties to the settlement agreement have filed a joint request under the June 23, 2005 Dutch law, "Wet collectieve afwikkeling massaschade", in which they have asked the Amsterdam Court of Appeals to declare the settlement agreement binding on the shareholders described above.
If the Court grants the request to declare the settlement agreement binding and that declaration becomes final, the following settlement relief will be available:
- $340.1 million to be distributed to investors who both resided and purchased shares outside the US from April 8, 1999 until March 18, 2004, under the supervision of the Foundation;
- $12.5 million to be divided equally among all shareholders who submit a valid claim for relief, and
- $6.25 million to VEB and other similar organizations to assist individual shareholders in preparing and submitting claims.
Shell will also request that the United States Securities and Exchange Commission (SEC) allow the $120 million paid by Shell in 2004 in connection with its settlement with the SEC to be distributed to purchasers of Shell shares consistent with the distribution contemplated by the settlement agreement. There is no guarantee that the SEC will agree to such a distribution, but if it does, an additional amount will be available for distribution to the shareholders covered by the settlement agreement.
Should a settlement in the US class action result in a larger distribution, Shell will generally pay the Non-US investors the difference between what they received and what they would have received had they stayed in the class action depending on when a settlement in the US class action occurs.
All of the costs of administering the settlement will be paid by Shell. Shell will also pay the out-of-pocket expenses incurred by the Foundation as well as the attorneys' fees and expenses to counsel for the Foundation.
The proposed settlement is conditioned on the US Court issuing a decision that results in the claims of the Covered Investors from not being heard in the pending class action. Should the US Court retain jurisdiction over the claims of foreign investors for any reason, the proposed settlement becomes null and void.
An expert report has been filed with the Dutch Court of Appeals from Michael Perino, professor of law at St. John's University School of Law in New York. In the report, Professor Perino opines that the settlement is fair and reasonable to the Covered Investors. Compared to the largest cash settlements of a securities class action, the proposed settlement would be among the top fifteen.
According to the available expert reports on damages, the Covered Investors had recoverable damages of approximately $3.6 billion. The proposed settlement will thus return to them from 9.5% to 12.8% of their estimated damages.
In cases that are the most comparable to the proposed settlement, median settlements were just 1.6% of estimated damages for cases settled through 2004 and just 0.6% for cases settled in 2005.
Special purpose foundation
Dutch law does not allow aggrieved individuals to petition the court for a class-wide settlement. Instead, the power to petition the Court to approve a class-wide settlement can only be done through the creation of a special purpose legal entity - a foundation or association. The Shell Reserves Compensation Foundation has been formed to represent qualified shareholders in this settlement.
It is beneficial to broaden the Foundation's membership to show the Amsterdam Court of Appeals that the Foundation is representative of the majority of Shell's shareholders.
The settlement resolves the dispute without litigation
This novel, groundbreaking settlement is an opportunity for non-U.S. institutional investors to resolve a dispute without resorting to litigation. It is appropriate that this settlement takes place in Europe rather than the U.S. as over 80% of Shell's stock was traded on European exchanges, its large shareholders are primarily located in Europe, and none of the alleged fraudulent activity occurred in the U.S.
Shell is very supportive of this settlement and hopes that its support of this settlement increases its goodwill with its shareholders. Shell has already made various corporate governance changes in response to the alleged fraudulent activity.
By becoming a Participant in the Shell Reserves Compensation Foundation, investors will show support for this settlement, which is good for all non-U.S. investors because the settlement provides the best opportunity to receive compensation. Having a large number of shareholders in various countries represented among the Foundation's Participants will demonstrate to the Dutch Court of Appeals the broad support for this settlement among Shell's stockholders, and will help to ensure that the Dutch Court of Appeals will approve this settlement.
Additional benefits are that the participants are part of a novel, progressive concept of settling disputes of corporate wrongdoing, and they will have direct access to the status of the settlement and claims administration.
For non-U.S. shareholders who also purchased Shell securities in the U.S., those purchases would remain unaffected by this settlement. If there is a settlement in the U.S. concerning U.S.-purchased securities, non-U.S. investors should be able to participate in that settlement as well.
Note that by becoming a Participant, an institution does not become a party to any settlement or any litigation.
1) The expression "Shell" as used in this text indicates the two former parent companies, i.e. The Shell Transport and Trading Company, Ltd., (formerly: The "Shell" Transport and Trading Company, plc.) and Shell Petroleum N.V. (the successor company to Royal Dutch Petroleum Company).