09:11     MTR CORPORATION<00066> - Announcement (2)                           

    conditions of the Old Waiver.                                             
                                                                              
    Given the unique circumstances in relation to connected transactions      
    between the Group and the Government as listed above, the Company has     
    made an application to the Stock Exchange for a waiver to be granted      
    from strict compliance with the requirements under Chapter 14A of the     
    Listing Rules. These unique circumstances result from the fact that the   
    Company has been a public sector transport provider and is beneficially   
    owned as to approximately 76 per cent. by the HKSAR Government.           
    Recognising these unique circumstances, pursuant to Rule 14A.42 of the    
    Listing Rules, the Company has applied for a waiver (the "New Waiver")    
    from strict compliance with the requirements under Chapter 14A of the     
    Listing Rules in respect of connected transactions entered into or to be  
    entered into between the Group and the Government on or after 31st        
    March, 2004. The Exchange has granted the New Waiver on the following     
    terms.                                                                    
                                                                              
    (A)        The Stock Exchange has granted a waiver from strict            
    compliance with the requirements under Chapter 14A of the Listing Rules   
    which would otherwise apply to transactions with the Government entered   
    into as a matter of law or regulation and to Operating Agreements.        
                                                                              
    (B)        The Stock Exchange has granted a waiver from strict            
    compliance with the requirements under Chapter 14A of the Listing Rules   
    which would otherwise apply to the Project Agreements, the Land           
    Transactions, the Entrustment Agreements, the Treasury Services           
    Agreements, the Purchasing Agreements, the Other Transactions and the     
    Octopus-KCRC Transactions subject to the following conditions:            
                                                                              
    (i)        where the Company would be required under Chapter 14A of the   
    Listing Rules to comply with the reporting and the announcement           
    requirements but not the independent shareholders' approval requirement,  
    details of the transaction will be disclosed in the Company's annual      
    report in accordance with Rule 14A.45 (in the case of a connected         
    transaction) or 14A.46 (in the case of a continuing connected             
    transaction) of the Listing Rules;                                        
                                                                              
    (ii)        where the Company would be required under Chapter 14A of the  
    Listing Rules to comply with the reporting, the announcement and the      
    independent shareholders' approval requirements, the Company will:        
                                                                              
    (a)        make an announcement of the transaction in accordance with     
    Rule 14A.47 of the Listing Rules and disclose the details of the          
    transaction in its annual report in accordance with Rule 14A.45 (in the   
    case of a connected transaction) or 14A.46 (in the case of a continuing   
    connected transaction) of the Listing Rules; and                          
                                                                              
    (b)        make the transaction subject to the approval of the board of   
    directors of the Company (with the directors appointed by the HKSAR       
    Government under section 8 of the Mass Transit Railway Ordinance          
    (Chapter 556 of the Laws of Hong Kong) and any director who holds a       
    position in the HKSAR Government being required to abstain from voting);  
                                                                              
    (iii)        in respect of any continuing connected transaction which is  
    not exempted under Rule 14A.33 of the Listing Rules from any of the       
    reporting, the announcement and the independent shareholders' approval    
    requirements:                                                             
                                                                              
    (a)        the independent non-executive directors of the Company will    
    review the transaction every year and confirm in the annual report that   
    the transaction has been entered into:                                    
                                                                              
    (1)        in the ordinary and usual course of the business of the        
    Company;                                                                  
                                                                              
    (2)        either on normal commercial terms or, if there are not         
    sufficient comparable transactions to judge whether they are on normal    
    commercial terms, on terms no less favourable to the Company than terms   
    available to or from independent third parties; and                       
                                                                              
    (3)        in accordance with the relevant agreement governing them on    
    terms that are fair and reasonable and in the interests of the            
    shareholders of the Company as a whole; and                               
                                                                              
    (b)        the auditors of the Company will provide a letter to the       
    board of directors of the Company each year (with a copy to the Stock     
    Exchange at least 10 business days prior to the bulk printing of the      
    annual report), confirming that the transaction:                          
                                                                              
    (1)        has been approved by the board of directors of the Company;    
    and                                                                       
                                                                              
    (2)        has been entered into in accordance with the relevant          
    agreement governing the transaction;