Palliser Capital, a London-based multi-strategy hedge fund firm, has called on miner Rio Tinto to let its Australian shareholders vote on a proposed independent review of the company’s dual-listed structure, according to a report by Reuters.
British shareholders will vote on 3 April at Rio Tinto’s annual general meeting (AGM) in London on a resolution introduced by Palliser, which argues that the dual-listing system is inefficient and undermines shareholder value. However, Rio Tinto has advised investors to vote against the proposal.
Notably, this resolution is absent from the agenda for Rio Tinto’s Australian AGM in Perth on 1 May, effectively excluding Australian investors from having a say on the matter. In a letter to the company, Palliser criticised this move, arguing that the issue holds equal significance for all shareholders.
Due to its dual structure, Rio Tinto (London-listed) and Rio Tinto Limited (Australia-listed) hold separate AGMs.
In 2022, rival BHP scrapped its dual-listing structure under pressure from activist investors, opting for a primary listing in Australia.
A Rio Tinto spokesperson confirmed that Palliser had submitted a requisition notice for the UK meeting but had not yet done so for the Australian AGM. The spokesperson added that the company has now provided guidance on how Palliser can submit a similar request for the Australian vote.
Palliser has yet to comment on whether it will move forward with the request.
London-listed shares make up 77% of Rio Tinto’s investor base, yet Australian shares trade at a 20% premium, largely due to tax advantages for Australian investors.
To address this imbalance, Rio Tinto could buy back London-listed shares – a move the company has previously considered to strengthen its balance sheet after its $6.7bn acquisition of lithium miner Arcadium, or raise capital in Australia, which would dilute existing Australian shareholders.
However, one major hurdle to a UK share buyback is Aluminium Corporation of China (Chinalco), which owns nearly 15% of Rio Tinto’s London-listed stock. Under agreements made in 2008, Chinalco cannot increase its stake without Australian government approval.
A source familiar with Chinalco’s position indicated that the state-owned firm prefers to maintain its holding rather than actively buying or selling Rio Tinto shares. Chinalco did not immediately respond to a request for comment.
