Royal Dutch Shell has promised small investors either cash or loan notes to resolve its longstanding tax issues caused by the merger.

When the companies were restructured to form one group rather than two, that gave rise to a £77m capital gains tax bill as small investors found they had to sell and repurchase shares, concretising capital gains liabilities.

The company said it would buy out remaining shareholders in its Royal Dutch arm either with cash or by issuing a loan note, which could be exchanged for shares that would not incur capital gains tax.

Small investors has complained bitterly about the tax bill. The Association of Private Client Investment Managers and Stockbrokers, which defends small investors' rights, said the move was 'long overdue'.