Aluminium ingots at a lay down area at BSL

Dual listed companies structure

Rio Tinto operates under a dual listed companies (DLC) structure. Since its formation in 1995, this cost effective structure has been designed to, in a tax efficient way, place the shareholders of Rio Tinto plc and Rio Tinto Limited in substantially the same position as if they held shares in a single entity owning all of the assets of both companies. 

Under the DLC structure, the businesses of Rio Tinto plc and Rio Tinto Limited are managed together, the boards of directors of each Company are the same, and shareholders of each Company have a common economic interest in the DLC structure.

We regularly review the company structure to ensure it's providing value, and as recently as 2024, an extensive independent review was conducted. The Board unanimously concluded that the DLC structure continues to be effective and provides benefits to Rio Tinto and our shareholders. 

The Board’s comprehensive review concluded that collapsing our DLC would likely negatively impact shareholder value in the following key areas:

Wasted franking credits

DLC collapse could adversely impact the individual tax position of tax-resident Australian shareholders and the Rio Tinto share price in due course.

  • DLC unification is expected to result in significant “wastage” of franking credits in the future given the >3x increase in franked dividends that would be paid to Rio Tinto shareholders, a large portion of whom would not be expected to benefit from them as they would not be tax-resident in Australia.
  • This would likely leave Rio Tinto unable to pay fully franked dividends in the longer term.
  • The DLC structure means Rio Tinto can use franking credits more efficiently, preserving this benefit for Australian shareholders.

The DLC structure provides for the efficient use of franking credits by allowing for the payment of franked dividends to only Rio Tinto Limited shareholders who are more likely to be Australian tax-resident.

Dual-listed company structure

Risks to share price

The Board believes that following a DLC collapse, it is highly unlikely that the Rio Tinto Limited share price would be maintained at pre-collapse levels and that it is more likely to trend towards the weighted average of the Rio Tinto plc and Rio Tinto Limited share prices. On average during 2024 this was c.14% below the Rio Tinto Limited share price.

Approximately US$50bn of additional incremental demand would be needed from Australian tax-resident shareholders to avoid this – this is significantly more than the average annual equity capital markets issuance in Australia over the last 10 years – at US$27.5bn.
Dual-listed company unified share price effect
Dual-listed company structure

  • What would the tax implications be of unification under the Limited line? 

    According to detailed analysis undertaken by external professional services firm EY, unification would generate one-off tax costs of mid-single-digit billions of US dollars.

  • What does the Grant Thornton report commissioned by Palliser say?

    The Grant Thornton desktop report was intended to advance Palliser’s previously published arguments, which our Board considered and rejected as part of its in-depth DLC unification review. Importantly, Grant Thornton’s desktop report, and its conclusions, relied on publicly available information. In its assessment of the tax costs of unification, Grant Thornton relied on the assessment of Palliser Capital’s own undisclosed “independent” tax advisor and publicly available information. The Grant Thornton report does not provide any supporting evidence to back up Palliser’s assertions regarding the alleged US$50 billion value destruction or even address this argument. 

  • Why can’t we publish the EY review of unification tax costs? 

    It is neither appropriate nor customary to publish detailed tax analyses containing confidential and highly commercially sensitive information such as future looking revenue streams, which would be materially prejudicial to the interests of Rio Tinto and our shareholders if made public.

  • Has the Board engaged thoroughly on this issue?

    Yes. The Board has engaged extensively, transparently, and in good faith on this topic. The Board undertook a comprehensive review of the DLC structure during 2024 with leading external advisors. We have also held several meetings with Palliser Capital, including with our Chairman, Chief Executive, Chief Financial Officer and selected non-executive directors. 

    The Board’s position on our DLC structure remains definitive following the 2024 review by leading professional service firm EY that established unification would destroy shareholder value. Our focus remains on executing our strategic priorities to drive performance, as outlined at our Capital Markets Day. In the absence of new facts or circumstances, it is not in the best interest of our shareholders to undergo a new analysis to justify re-opening a structural matter that has already been comprehensively reviewed and closed.

Markets

Rio Tinto plc

The principal market for Rio Tinto plc shares is the London Stock Exchange with the shares trading through the Stock Exchange Electronic Trading Service (SETS) system.

Rio Tinto plc American Depositary Receipts are listed on the New York Stock Exchange.

Rio Tinto plc discloses the number of shares in issue, the number of treasury shares and the number of publicly owned shares, in its monthly Total Voting Right announcement.

Rio Tinto Limited

Rio Tinto Limited shares are listed on the Australian Securities Exchange (ASX). The ASX is the principal trading market for Rio Tinto Limited shares. The ASX is a national stock exchange with an automated trading system.

There are currently 371,216,214 publicly held Rio Tinto Limited ordinary shares on issue.

American Depository Receipts (ADRs)

Rio Tinto plc has a sponsored ADR facility with JPMorgan Chase Bank NA (JPMorgan) under a Deposit Agreement, dated 13 July 1988, as amended on 11 June 1990, as further amended and restated on 15 February 1999, 18 February 2005 when JPMorgan became Rio Tinto plc’s depositary, and on 29 April 2010. The ADRs evidence Rio Tinto plc American Depositary Shares (ADS), each representing one ordinary share. The shares are registered with the US Securities and Exchange Commission (SEC), are listed on the NYSE and are traded under the symbol RIO.

 

Substantial shareholder disclosure requirements

There are disclosure requirements in the UK and Australia applying to holders of substantial shareholdings in Rio Tinto plc and Rio Tinto Limited respectively. These requirements are summarised below.

The particular application of these requirements will depend on matters specific to the shareholding and the shareholder’s circumstances. If a holder is unclear on the application of these requirements, it is recommended they seek legal advice.

  • UK disclosure requirements
  • Australian disclosure requirements
Under the UK Listing Authority’s Disclosure and Transparency Rules (DTRs) any shareholder of Rio Tinto plc holding 3 per cent or more of the voting rights in Rio Tinto plc as a shareholder is required to give notice to Rio Tinto plc and the Financial Conduct Authority when that shareholding is created, ceases or is increased or decreased by a whole percentage point. The notification to Rio Tinto plc should comply with the requirements of DTR 5.8 and may be submitted to the Company by email to company.secretarial@riotinto.com.

The Australian Securities and Investments Commission (“ASIC”) has made various declarations1 modifying the application of the Australian Corporations Act as it applies to Rio Tinto’s dual listed companies structure . These modifications include changes to the substantial shareholder disclosure requirements under Chapter 6C of the Corporations Act.

Rio Tinto Limited

The modified provisions require any person and their associates2 with voting power of 5 per cent or more in Rio Tinto Limited to give notice to Rio Tinto Limited and ASX when that holding is created, ceases or is increased or decreased by at least one per cent.

Rio Tinto plc

Further, the modified disclosure provisions also require a person and their associates2 to aggregate their holdings of both Rio Tinto plc and Rio Tinto Limited shares to determine if there is a requirement to disclose an interest in Rio Tinto Limited. In broad terms, these provisions require that a person’s interest in voting shares in Rio Tinto plc is taken to give rise to an interest in Rio Tinto Limited calculated as a percentage of the combined voting share capitals of Rio Tinto plc and Rio Tinto Limited.

So for example, where a shareholder and its associates2 hold:

  • 80,000,000 voting shares in Rio Tinto plc; and
  • 20,000,000 voting shares in Rio Tinto Limited,

for the purposes of the modified disclosure provisions, the holdings should be aggregated, resulting as shown below in a disclosable interest in Rio Tinto Limited of 6.17%:

Holdings of Shareholder and its associates2

Issued voting capital

% of voting capital held in individual listed entities

Voting capital in each entity as a % of combined voting share capital

Rio Tinto plc

80,000,000

1,249,923,674

6.40%

4.93%

Rio Tinto Limited

20,000,000

371,216,214

5.39%

1.23%

Aggregated

1,621,139,888

6.17%

These modified rules apply even if a person does not hold any shares in Rio Tinto Limited.

There is no corresponding requirement in the UK to aggregate Rio Tinto plc and Rio Tinto Limited shareholdings for the purpose of disclosure under the DTRs.

 

Footnotes

1 These declarations are set out in ASIC instruments numbered 01/1038, 01/1039, 01/1040 and 01/1041, which were gazetted by ASIC on 28 August 2001.

2As defined in Division 2 of Part 1.2 of the Corporations Act, as modified by ASIC instrument 01/1038.

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