The Mass Transit Railway Corporation, a statutory corporation, was established in 1975 under the Mass Transit Railway Corporation Ordinance and commissioned to build and operate Hong Kong's underground mass transit system.

In 2000, the MTR Corporation Limited (MTRCL) was listed in Hong Kong and is now subject to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited. Additionally, with the issuance of bonds listed in the US, the MTRCL is a US SEC reporting company and generally bound by the regulations set out in the Sarbanes-Oxley Act of 2002 . The Company currently operates under the revised Mass Transit Railway Ordinance which oversees the framework for our business and operations as a listed entity. At year-end 2004, approximately 76% of the Company's shares were held by the Financial Secretary Incorporated in trust on behalf of the Hong Kong SAR Government.

Internally, the Company has established and maintains a hierarchy and system of governance that promotes transparency and the mechanisms for checks and balances to ensure accountability at all levels of the Corporation. There are 14 major management committees that oversee the operations and business planning of the Corporation, actively involving Board members and the Executive Directorate. Each committee meets regularly and functions under a system that directs the policy of continuous improvement.

Rail merger
In February 2004, the Hong Kong SAR Government announced the invitation to the MTRCL and the Kowloon-Canton Railway Corporation (KCRC) to commence discussions on the possible merger between the two entities. A joint merger report was submitted to the Government in September 2004 which is currently under review. In the event that this proposed merger takes place, significant changes in our structure, operations and governance will unfold. As in all major corporate mergers, we face the critical issues of integrating operations, management and workforce. Our strategy is to achieve the key parameters set by Government while assuring our stakeholders of responsible investment, maintaining transparency when communicating with our stakeholders, and assuming best practice for long-term sustainability of the new entity.

Transparency
As a publicly listed company, we subscribe to the codes of practice set out in the Listing Rules, particularly in transparency, connected party transactions and minority shareholder interests. Public debate may arise in connection with these issues and the role of the Hong Kong SAR Government, both as the industry regulator and the majority shareholder of the Company. To create a careful balance in this relationship, we enact a policy and have established procedures for best practice under relevant local and international regulations in respect of the protection of minority share interest, and in maintaining transparency and full disclosure in conducting transactions material to the Corporation's sustainability. Current issues range from the fare-setting policy mechanism to land development rights and, possibly in the near future, the approval process for the merger of Hong Kong's two major rail operators.

Contact: Investor Relations Department, investor@mtr.com.hk

Further reading:
Governance
Board of Directors
2004 Annual Report