24th Feb 2025 21:31
(Alliance News) - Activist investor Palliser Capital on Monday said it is "deeply disappointed" by Rio Tinto PLC's decision to reject a motion to review its dual listing.
In a letter to the board of the Anglo-Australian miner, Palliser said in light of the "irrefutable rationale" for unification the resolution was "necessary" to ensure a proper examination of the "anomalous and illogical decision to retain the status quo."
"We remain deeply disappointed that the board has outright rejected a review process which is entirely in line with best practices for a matter of such critical importance. You have insisted it is not in the interests of shareholders to share your analysis or subject it to independent scrutiny – even though the good corporate governance principles of transparency, accountability and fairness dictate otherwise," the letter continued.
Worse still, Palliser noted that Rio has gone so far as to deliberately omit the resolution from Rio Tinto Ltd's annual general meeting.
This prevents "23% of Rio Tinto's shareholder base from voting on the simple question of whether Rio Tinto’s decision to retain its archaic structure needs full and proper interrogation" and "disregards the core principles of the [dual listed company] structure that Rio Tinto Ltd and Rio Tinto PLC shareholders must vote as one on matters of joint interest," Palliser explained.
Palliser said it shows the investor community that Rio will not allow a "fair and fully inclusive" shareholder debate on unification-related issues.
Palliser in December called on Rio to abandon its "outdated" dual listing structure. Palliser said Rio should follow rival BHP Group Ltd, which moved its primary listing to Sydney in 2022.
Last week, Rio called on shareholders to reject an annual general meeting motion that may have seen the miner call time on its London primary listing.
"The board considers that resolution 24 is against the best interests of shareholders and of Rio Tinto as a whole and unanimously recommends that you vote against resolution 24," Rio Tinto said in a document on Thursday.
Rio, listing in London and Sydney, believes its dual-listing structure "continues to be effective and provide benefits to Rio Tinto and its shareholders".
"The DLC structure provides access to significant depth of liquidity in demand for, and trading of, Rio Tinto shares. This is achieved through primary listings and premium index inclusion in two major capital markets and mining investment centres, with a pre-eminent position in the UK market," it added.
"The board firmly rejects the notion that the DLC structure has resulted in value destruction of USD50 billion, and reiterates its strong focus on sustainable shareholder value creation and effective capital management."
The firm believes ending the DLC would be "value destructive". The current listing structure means Rio Tinto has "flexibility to raise capital, pursue strategic M&A and deliver shareholder returns".
Shares in Rio Tinto closed down 1.9% at 4,984.50 pence each in London on Monday.
By Jeremy Cutler, Alliance News reporter
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