Page 345 - Annual Report 2020

DLC Dividend Share Cross guarantees
Each of BHP Group Limited and BHP Group Plc is authorised to BHP Group Limited and BHP Group Plc have each executed
issue a DLC Dividend Share to the other company or a wholly a Deed Poll Guarantee in favour of the creditors of the other
owned subsidiary of it. In effect, only that other company or a company. Under the Deed Poll Guarantees, each company has Strategic Report
wholly owned subsidiary of it may be the holder of the share. guaranteed certain contractual obligations of the other company.
The share is redeemable. This means that creditors entitled to the benefit of the BHP Group
The holder of the share is entitled to be paid such dividends as Limited Deed Poll Guarantee and the BHP Group Plc Deed Poll
the Board may decide to pay on that DLC Dividend Share Guarantee will, to the extent possible, be placed in the same
provided that: position as if the relevant debts were owed by both BHP Group
Limited and BHP Group Plc on a combined basis.
• the amount of the dividend does not exceed the cap
mentioned below Restrictions on takeovers of one company only
• the Board of the issuing company in good faith considers paying The BHP Group Limited Constitution and the BHP Group Plc
the dividend to be in furtherance of any of the DLC principles, Articles of Association have been drafted to ensure that, except
including the principle of BHP Group Limited and BHP Group Plc with the consent of the Board, a person cannot gain control of Governance at BHP
operating as a single unified economic entity one company without having made an equivalent offer to the
The amounts that may be paid as dividends on a DLC Dividend ordinary shareholders of both companies on equivalent terms.
Share are capped. Broadly speaking, the cap is the total amount Sanctions for breach of these provisions would include withholding
of the preceding ordinary cash dividend (whether interim or final) of dividends, voting restrictions and the compulsory divestment of
paid on BHP Group Limited ordinary shares or BHP Group Plc shares to the extent a shareholder and its associates exceed the
ordinary shares, whichever is greater. The cap will not apply to relevant threshold.
any dividend paid on a DLC Dividend Share if the proceeds of
that dividend are to be used to pay a special cash dividend on 7.4 Material contracts
ordinary shares.
A DLC Dividend Share otherwise has limited rights and does not DLC structure agreements
carry a right to vote. DLC Dividend Shares cannot be used to BHP Group Limited (then known as BHP Limited) and BHP Group Remuneration Report
transfer funds outside of BHP as the terms of issue contain Plc (then known as Billiton Plc) merged by way of a DLC structure
structural safeguards to ensure that a DLC Dividend Share may only on 29 June 2001. To effect the DLC structure, BHP Limited and
be used to pay dividends within the Group. For more information Billiton Plc (as they were then known) entered into the following
on the rights attaching to and terms of DLC Dividend Shares, contractual agreements:
refer to section 7.5, the Constitution of BHP Group Limited and • BHP Billiton DLC Structure Sharing Agreement
the Articles of Association of BHP Group Plc. • BHP Billiton Special Voting Shares Deed
Joint Electorate Actions • BHP Billiton Limited Deed Poll Guarantee
Under the terms of the DLC agreements, BHP Group Limited and • BHP Billiton Plc Deed Poll Guarantee
BHP Group Plc have implemented special voting arrangements so For information on the effect of each of these agreements, Directors’ Report
that the ordinary shareholders of both companies vote together as refer to section 7.3.
a single decision-making body on matters that affect the ordinary
shareholders of each company in similar ways. These are referred Framework Agreement
to as Joint Electorate Actions. For so long as the Equalisation Ratio
remains 1:1, each BHP Group Limited ordinary share will effectively On 2 March 2016, BHP Brasil together with Vale and Samarco,
have the same voting rights as each BHP Group Plc ordinary share entered into a Framework Agreement with the Federal Government
on Joint Electorate Actions. of Brazil, states of Espírito Santo and Minas Gerais and certain other
authorities to establish a foundation (Fundação Renova) that will
A Joint Electorate Action requires approval by ordinary resolution develop and execute environmental and socio-economic programs
(or special resolution if required by statute, regulation, applicable to remediate and provide compensation for damage caused
listing rules or other applicable requirements) of BHP Group by the Samarco dam failure. For a description of the terms
Limited and BHP Group Plc. In the case of BHP Group Limited, of the Framework Agreement, refer to section 6.7. Financial Statements
both the BHP Group Limited ordinary shareholders and the holder
of the BHP Group Limited Special Voting Share vote as a single
class and, in the case of BHP Group Plc, the BHP Group Plc ordinary 7.5 Constitution
shareholders and the holder of the BHP Group Plc Special Voting
Share vote as a single class. This section sets out a summary of the Constitution of BHP Group
Limited and the Articles of Association of BHP Group Plc. Where
Class Rights Actions the term ‘BHP’ is used in this section, it can mean either BHP Group
Matters on which ordinary shareholders of BHP Group Limited may Limited or BHP Group Plc.
have divergent interests from the ordinary shareholders of BHP Provisions of the Constitution of BHP Group Limited and the
Group Plc are referred to as Class Rights Actions. The company Articles of Association of BHP Group Plc can be amended only
wishing to carry out the Class Rights Action requires the prior where such amendment is approved by special resolution either: Additional information
approval of the ordinary shareholders in the other company voting
separately and, where appropriate, the approval of its own ordinary • by approval as a Class Rights Action, where the amendment
results in a change to an ‘Entrenched Provision’ or
shareholders voting separately. Depending on the type of Class
Rights Action undertaken, the approval required is either an • otherwise, as a Joint Electorate Action
ordinary or special resolution of the relevant company. In 2015, shareholders approved a number of amendments
The Joint Electorate Action and Class Rights Action voting to our constitutional documents to amend the terms of the
arrangements are secured through the constitutional documents Equalisation Shares (which were renamed as DLC Dividend 7
of the two companies, the DLC Structure Sharing Agreement, the Shares) and to facilitate the more streamlined conduct of
BHP Special Voting Shares Deed and rights attaching to a specially simultaneous general meetings.
created Special Voting Share issued by each company and held in For a description of Joint Electorate Actions and Class Rights
each case by a special voting company. The shares in the special Actions, refer to section 7.3.2.
voting companies are held legally and beneficially by Law
Debenture Trust Corporation Plc. Shareholder information

BHP Annual Report 2020 343