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As a public company committed to best practice, we are bound to the principle of transparency, in particular, those decisions governing related party transactions and minority shareholder interests. The MTR Corporation Limited, by its shareholder structure, is majority owned by the HKSAR Government and has a number of government representatives sitting on its Board.
In response to a potential of conflict of interests at the initial merger announcement in 2004, the Independent Committee, supervised by selected independent non-executive Board directors, was established to consider and review the terms of the proposed rail merger and to advise independent shareholders whether the terms are fair and reasonable. During the process, the Executive Directorate, acting on behalf of the MTR Corporation, assumed responsibility for the negotiations and meetings held with appropriate regulatory departments and bodies. As it is not a practice of the organisation to hire lobbyists, the Corporation negotiated directly through its Executive Directorate with Government on relevant issues.
Although involved in the consultation process to arrive at acceptable terms and appropriate framework, under strict governance procedures of the Company, Government and the representatives of its material shareholding interests, including the Boards members of the MTR Corporation and KCRC, abstained from voting with respect to the EGM resolution which decided shareholder acceptance of the merger. Voting completed, the clear majority (approximately 80%) of EGM voting shareholders endorsed the merger.
The current Board structure and governance practices retain pre-merger status with an additional Director appointed to represent the interests of the KCRC. Refer to the 2007 Annual Report for in-depth discussions of the Company's overall governance practices.
The Sustainability and Corporate Social Responsibility (S&CSR) Steering Committee was vested in 2006 with responsibilities to ensure the proper governance and implementation of policy and initiatives pertaining to sustainable best practices. Chaired by the Director of China and International Business, the Committee currently supervises the corporate-wide Climate Change Policy, Sustainability Policy, CSR Guideline and related initiatives, and all subsequent related directives, programmes and proposals pertaining to them.
The Steering Committee meets every two months and all members remain informed on matters through regular circulation of papers. A meeting with the Executive Directorate is taken on a quarterly basis to inform senior management of progress with the flexibility of added meetings when deemed necessary. The Committee is also responsible for the Corporation's Sustainability Report which is submitted to the Board for review and approval.
Of particular interest for future sustainable development is the Board-level CSR Committee to be established in 2008. This decision reflects the substantial commitment to establish the corporate-wide CSR policy and related practices. The Policy will update the current CSR Guideline and establish a governance system to enact and monitor Policy directives. The new Committee will oversee the existing Steering Committee's activities and will consolidate all CSR activities under the Policy directives. Formalisation of the Policy and Committee are in progress.