The Department of Trade and Industry is poised to appoint inspectors and launch its own investigation into Shell.
It is understood that the DTI is preparing to act after Monday's explosive report into the company's misreported reserves scandal revealed an elaborate cover-up by former bosses.
UK shareholders are also organising meetings with their Dutch and US counterparts in the next few days. They are leading calls for the group's dual Dutch and UK structure to be reformed and reject the company's attempts to blame reclassifying a quarter of its "proven" reserves as "probable" on "human failings".
Finlay MacDonald from Britannic Asset Management said: "It's inconsistent for the company to blame what has happened on human failings, given the deficiencies in the company's reporting and procedures. Putting the blame on to two or three people does not adequately explain what happened and the remaining management has not been fully absolved."
Finance director Judy Boynton resigned last week following on from former chairman Sir Philip Watts and exploration and production chief Walter van der Vijver.
Hugh Collum, the outgoing chairman of state owned British Nuclear Fuels, has been approached to become the new chairman of UK arm Shell Transport & Trading. His close relations to the DTI are seen as an asset in the event of a DTI investigation. The DTI, which has been monitoring the situation, has not yet approached Shell.
Under the 1985 Companies Act, the DTI can appoint inspectors to investigate a firm if it suspects fraud or misconduct has been committed, whether by intent or through the omission of material information. It also has its own internal investigations unit, the CIB, and can refer cases to the Serious Fraud Office.
On Friday, City regulator the Financial Services Authority announced it had begun a formal investigation into Shell. It is already being probed by US regulator the Securities & Exchange Commission, and the US Justice Department.
A lawyer from a leading City firm said: "The DTI will be very concerned about any allegations of inaccurate or false information being put in the public domain. UK authorities do not want to be seen as a light touch if the SEC and US authorities are being very pro-active investigating Shell."
The SEC is considering levelling civil or criminal fraud charges against the ousted trio. But US lawyer John Reed from Duane Morris said Shell non-executive directors could face civil liability - "if it could be demonstrated that the non-disclosures could have been avoided if they had engaged in proper oversight of the company".
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