Page 344 - Annual Report 2020

7.1 History and development Australian Foreign Investment Review Board conditions
The Treasurer of Australia approved the DLC merger subject to
BHP Group Limited (formerly BHP Billiton Limited, then BHP Limited certain conditions, the effect of which was to require that, among
and, before that, The Broken Hill Proprietary Company Limited) was other things, BHP Group Limited continues to:
incorporated in 1885 and is registered in Australia with ABN 49 004 • be an Australian company, which is headquartered in Australia
028 077. BHP Group Plc (formerly BHP Billiton Plc, and before that
Billiton Plc) was incorporated in 1996 and is registered in England • ultimately manage and control the companies that conducted
and Wales with registration number 3196209. Successive the businesses that were conducted by its subsidiaries at the
predecessor entities to BHP Group Plc have operated since 1860. time of the DLC merger for as long as those businesses form
part of BHP
We have operated under a Dual Listed Company (DLC) structure
since 29 June 2001. Under the DLC structure, the two parent The conditions also require the global headquarters of BHP
companies, BHP Group Limited and BHP Group Plc, operate as a to be in Australia.
single economic entity, run by a unified Board and senior executive The conditions have effect indefinitely, subject to amendment of
management team. For more information on the DLC structure, the Australian Foreign Acquisitions and Takeovers Act 1975 (FATA)
refer to section 7.3. or any revocation or amendment by the Treasurer of Australia.
If BHP Group Limited no longer wishes to comply with these
7.2 Markets conditions, it must obtain the prior approval of the Treasurer.
Failure to comply with the conditions results in substantial
As at the date of this Annual Report, BHP Group Limited has a penalties under the FATA.
primary listing on the Australian Securities Exchange (ASX) (ticker Equalisation of economic and voting rights
BHP) in Australia and BHP Group Plc has a premium listing on the The economic and voting interests attached to each BHP Group
UK FCA’s Official List and its ordinary shares are admitted to trading Limited ordinary share relative to each BHP Group Plc ordinary
on the London Stock Exchange (LSE) (ticker BHP). BHP Group Plc share are determined by a ratio known as the Equalisation Ratio.
also has a secondary listing on the Johannesburg Stock Exchange
(JSE) (ticker BHP) in South Africa. The Equalisation Ratio is currently 1:1, meaning one BHP Group
Limited ordinary share currently has the same economic and
In addition, BHP Group Limited and BHP Group Plc are listed on the voting interests as one BHP Group Plc ordinary share.
New York Stock Exchange (NYSE) in the United States. Trading on
the NYSE is via American Depositary Receipts (ADRs) evidencing The Equalisation Ratio governs the proportions in which dividends
American Depositary Shares (ADSs), with each ADS representing and capital distributions are paid on the ordinary shares in each
two ordinary shares of BHP Group Limited or BHP Group Plc. company relative to the other. Given the current Equalisation Ratio
Citibank N.A. (Citibank) is the Depositary for both ADS programs. of 1:1, the amount of any cash dividend paid by BHP Group Limited
BHP Group Limited’s ADSs have been listed for trading on the NYSE on each BHP Group Limited ordinary share must be matched by an
(ticker BHP) since 28 May 1987 and BHP Group Plc’s since 25 June equivalent cash dividend by BHP Group Plc on each BHP Group Plc
2003 (ticker BBL). ordinary share, and vice versa. If one company is prohibited by
applicable law or is otherwise unable to pay a matching dividend,
the DLC Structure Sharing Agreement requires that BHP Group
7.3 Organisational structure Limited and BHP Group Plc will, as far as practicable, enter into
such transactions with each other as their Boards agree to be
7.3.1 General necessary or desirable to enable both companies to pay matching
dividends at the same time. These transactions may include BHP
BHP consists of BHP Group Limited and BHP Group Plc, operating Group Limited or BHP Group Plc making a payment to the other
as a single unified economic entity, following the completion of the company or paying a dividend on the DLC Dividend Share held by
DLC merger in June 2001 (the DLC merger). For a full list of BHP the other company (or a subsidiary of it). The DLC Dividend Share
Group Limited and BHP Group Plc subsidiaries, refer to section may be used to ensure that the need to trigger the matching
5.2 note 13. dividend mechanism does not arise. BHP Group Limited issued a
DLC Dividend Share on 23 February 2016. No DLC Dividend Share
7.3.2 DLC structure has been issued by BHP Group Plc.
For more information on the DLC Dividend Share, refer to ‘DLC
BHP shareholders approved the DLC merger in 2001, which Dividend Share’ sub-section and section 7.5.
was designed to place ordinary shareholders of both companies
in a position where they have economic and voting interests in a The Equalisation Ratio may be adjusted to maintain
single group. economic equivalence between an ordinary share in each
The principles of the BHP DLC structure are reflected in the of the two companies where, broadly speaking (and subject
DLC Structure Sharing Agreement and include the following: to certain exceptions):
• The two companies must operate as if they are a single • a distribution or action affecting the amount or nature of issued
unified economic entity, through Boards of Directors that share capital is proposed by one of BHP Group Limited and BHP
comprise the same individuals and a unified senior executive Group Plc and that distribution or action would result in the ratio
management team. of economic returns on, or voting rights in relation to Joint
• The Directors of both companies will, in addition to their Electorate Actions (see below) of, a BHP Group Limited ordinary
duties to the company concerned, have regard to the interests share to a BHP Group Plc ordinary share not being the same,
of the ordinary shareholders in the two companies as if the two or would benefit the holders of ordinary shares in one company
companies were a single unified economic entity and, for that relative to the holders of ordinary shares in the other company
purpose, the Directors of each company take into account in • no ‘matching action’ is taken by the other company. A matching
the exercise of their powers the interests of the shareholders action is a distribution or action affecting the amount or nature
of the other. of issued share capital in relation to the holders of ordinary shares
• Certain DLC equalisation principles must be observed. These in the other company, which ensures that the economic and
are designed to ensure that for so long as the Equalisation Ratio voting rights of a BHP Group Limited ordinary share and BHP
between a BHP Group Limited ordinary share and a BHP Group Group Plc ordinary share are maintained in proportion to the
Plc ordinary share is 1:1, the economic and voting interests Equalisation Ratio
resulting from holding one BHP Group Limited ordinary share For example, an adjustment would be required if there were to
and one BHP Group Plc ordinary share are, so far as practicable, be a capital issue or distribution by one company to its ordinary
equivalent. For more information, refer to sub-section shareholders that does not give equivalent value (before tax) on a
‘Equalisation of economic and voting rights’ below. per share basis to the ordinary shareholders of the other company
and no matching action was undertaken. Since the establishment
of the DLC structure in 2001, no adjustment to the Equalisation
Ratio has ever been made.

342 BHP Annual Report 2020