The Executive Council has endorsed the Rail Merger Bill, the Environment, Transport & Works Bureau says, adding it will be tabled at the Legislative Council on July 5.

The Mass Transit Railway Corporation will invite minority shareholders to approve the merger proposal once legislative amendments have been endorsed. Depending on the progress of the legislative amendment exercise, it envisages that the whole merger process will take about one year to complete.

Under the proposed structure for the rail merger, the Kowloon-Canton Railway Corporation will enter into a service concession agreement with the MTRC to grant the latter the right to use its assets to operate KCRC lines and its other transport-related businesses.

The bill empowers the KCRC to grant service concession to the MTRC and expands the scope of the latter's franchise for taking up the operation of KCRC services. The franchise period will be re-set to 50 years from merger date.

There are provisions in the bill to provide for the right of the Government to have access where necessary to common assets used to support operations of both MTR and KCR systems under specified circumstances of suspension, revocation or expiry of franchise.

The bill includes provisions to vest the employment contracts of all serving KCRC staff at the time of the merger with continuity of their prevailing retirement benefits.