Corporate Management Structure

MTR Corporation Limited's (the "Company") system of governance is underpinned by robust management systems and internal controls that clearly delineate the responsibilities and accountability of the Board of Directors, the Executive Directorate and managers.

The Company's shares are listed on The Stock Exchange of Hong Kong Limited ("HKSE"). The 2006 Annual Report describes how the Company applied the principles of the Code on Corporate Governance Practices (the "Code") as contained in Appendix 14 of The Rules Governing the Listing of Securities on HKSE and complied with the Code. Additionally, as a U.S. Securities and Exchange Commission reporting company, it is generally bound by the United States Sarbanes-Oxley Act of 2002.

Governance of the Company 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, of whom six are independent non-executive directors. Among the Board members, two are women, one of whom was appointed by the HKSAR Government, which as of December 31, 2006 and through The Financial Secretary Incorporated held approximately 76.58% of the ordinary shares of the Company. With their professional backgrounds and business acumen, Members of the Board bring their valuable experience to the Board for promoting the best interests of the Company and its shareholders. The Board has established the Nominations, Audit, Remuneration and Independent Committees. The purpose of setting up the Independent Committee is to consider and review the terms of the proposed rail merger between the Company and Kowloon-Canton Railway Corporation and to advise independent shareholders whether the terms are fair and reasonable.

Pursuant to the Articles of Association of the Company and the Protocol adopted, 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. The Board oversees the management of other executive committees through the Executive Directorate. In addition, the Board is responsible for the system of internal controls, setting appropriate policies and reviewing the effectiveness of such controls of the Company.

The Executive Directorate comprises the Chief Executive Officer plus seven divisional heads. Members of the Executive Directorate 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. More in-depth coverage of the roles and responsibilities of the Members of the Board and the Members of the Executive Directorate is available in the 2006 Annual Report.

Sustainability Governance

The S&CSR Steering Committee ensures the implementation of policy and initiatives pertaining to sustainable best practices. Chaired by the Director of China and International Business, it supervises the corporate-wide Sustainability Policy, CSR Guideline, and all subsequent related initiatives, programmes and proposals.  The Steering Committee reports directly to the Executive Directorate on a timely basis.