The Company articulates a hierarchy and system of governance that promotes transparency and the mechanisms for checks and balances to ensure accountability at all levels of the Company. As a listed public company in Hong Kong, the MTR Corporation Limited (MTRCL) conducts itself in compliance to the Code on Corporate Governance Practices (the "Code") as set out in The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, Appendix 14. Additionally, as a SEC reporting member, we are generally bound to the regulations set out in the United States Sarbanes-Oxley Act of 2002.
The updated Code on Corporate Governance Practices under The Listing Rules requires as of 2005 new provisions in Board composition and governance practices, to which the Company is fully compliant except that with respect to Code Provision A.4.1, in which non-executive directors of the Company are not appointed for a specific term but are subject (save for those appointed pursuant to Section 8 of the MTR Ordinance) to retirement by rotation and re-election at the Company's annual general meetings in accordance with Articles 87 and 88 of the Company's Articles of Association. Dr. Raymond Ch'ien Kuo-fung, the Chairman, was appointed by the HKSAR Government pursuant to the Articles of Association, for three years with effect from 21 July 2003. The Company has a substantial proportion (6 of 11) of independent non-executive directors on the Board and two women currently sit on the Board in the capacity of non-executive directors.
Management ĦE Governance is implemented through a two-tier management structure, the Board and the Executive Directorate. The Board comprises an 11-member panel, the majority (10) being non-executive directors who bring a wide range of business, industry and financial acumen to the Company. The Board directly oversees the Nominations, Audit, Remuneration and Independent Committees and oversees the management of other executive committees in conjunction with the Executive Directorate.
The overall management of the Company's business is vested in the Board. Pursuant to the Articles of Association and the Protocol adopted by the Board, the Board has delegated the day-to-day management of the Company's business to the Executive Directorate, and focuses its attention on matters affecting the Company's overall strategic policies, finances and shareholders. These include financial statements, dividend policy, significant changes in accounting policy, annual operating budget, certain material contracts, strategies for future growth, major financing arrangements and major investments, risk management strategies, treasury policies and fare structures.
The Executive Directorate comprises the Chief Executive Officer plus seven divisional heads. The Directorate members are appointed by the Board and responsible for the implementation of strategy and policies as decided by the Board. They oversee the ongoing management of the Company and together with senior managers regularly report to the Board on the performance of the principal activities of the Company. In-depth coverage on the roles and responsibilities of the Members of the Executive Directorate and the Members of the Board is available in the 2005 Annual Report.
Regulators ĦE Although the Company does not lobby governments or regulators or hire lobbyists, meetings are held amongst Members of the Board and appropriate outside bodies when necessary to field issues that concern the viability of the Company and of general transport issues.
For full discussions of our governance policy, practices and procedures, defer to the 2005 Annual Report.
