Rio Tinto Group (ASX:RIO) has urged Australian shareholders to reject a proposal by activist hedge fund Palliser Capital to dismantle its dual-listed structure, warning the move could negatively impact dividends, the Australian Financial Review reported on April 11, citing an email sent to Rio Tinto shareholders.
Palliser, a small shareholder in Rio's London-listed stock, is pushing for a strategic review to unify the miner under a single Australian entity as 80% of Rio's earnings are generated in Australia, per the report.
The proposal, which will go to a vote by Australian shareholders next month, has already been voted on in London, with results pending, the report added.
The company said the move could trigger billions in tax costs, reduce dividend franking, and hit share prices. It also highlighted that the proposal would duplicate a previous review that found unification was not in shareholders' interests, and Palliser's call for an external shareholder representative would undermine board governance and create conflicts of interest.
The hedge fund's resolution needs 75% approval in London and Australia.
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