Following five years of negotiations and the enactment of the Rail Merger Ordinance after its passage through the Legislative Council, the KCRC ceased to be a public transport operator on 2 December 2007, becoming thereafter primarily simply the holder of railway assets. Instead of being the operator of those assets, KCRC granted MTRCL the right to operate KCRC's rail and feeder bus network under a service concession agreement for an initial period of 50 years, which may be extended. In return MTRCL was required to make an upfront payment to KCRC of HK$4.25 billion for the service concession and certain short-lived railway assets of KCRC such as stores and spares, and thereafter a fixed annual payment of HK$750 million and, commencing 36 months after the date of the merger (i.e. 2 December 2010), an additional variable annual payment calculated according to a pre-agreed set of sharing ratios as follows –
