T/ESM 2012 -LT/en 1 TREATY  
ESTABLISHING THE EUROPEAN STABILITY MECHANISM  
BETWEEN THE KINGDOM OF BELGI UM, THE FEDERAL REPU BLIC OF GERMANY,  
THE REPUBLIC OF ESTO NIA, IRELAND, THE HE LLENIC REPUBLIC,  
THE KINGDOM OF SPAIN , THE FRENCH REPUBLI C, 
THE ITALIAN REPUBLIC , THE REPUBLIC OF CYPRUS,  THE REPUBLIC OF LATVIA , 
THE REPUBLIC OF LITHUANIA,  THE GRAND DUCHY OF LUXEMBOURG, MALTA , 
THE KINGDOM OF THE N ETHERLANDS, THE REPU BLIC OF AUSTRIA,  
THE PORTUGUESE REPUB LIC, THE REPUBLIC OF  SLOVENIA,  
THE SLOVAK REPUBLIC  AND  THE REPUBLIC OF FINL AND  
 
 
T/ESM 2012 -LT/en 2 THE CONTRACTING  PARTIES,  the Kingdom of Belgium, the Federal Republic of Germany, 
the Republic of Estonia,  Ireland, the Hellenic Republic, the Kingdom of Spain, the French 
Republic, the Italian Republic, the Republic of Cyprus,  the Republic of Latvia,  the Re public of 
Lithuania,  the Grand Duchy of Luxembourg, Malta, the Kingdom of the Neth erlands, the Republic 
of Austria, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic and the 
Republic of Finland (the " euro area Member  States " or " ESM  Members "); 
 
COMMITTED  TO ensuring the financial stability of the euro area;  
 
RECALLING  the Conclusions of the European Council adopted on 25 March 2011 on the 
establishment of a European stability mechanism;  
 
 
 
T/ESM 2012 -LT/en 3 WHEREAS:  
 
(1) The European Council agreed on 17 December 2010 on the need for euro area Member  States 
to establish a permanent stability mechanism. This European Stability Mechanism ( "ESM ") 
will assume the tasks currently fulfilled by the European Financial Stability Facility ( "EFSF ") 
and the European F inancial Stabilisation Mechanism ( "EFSM ") in providing, where needed, 
financial assistance to euro area Member States.  
 
(2) On 25 March 2011, the European Council adopted Decision 2011/199/EU amending 
Article  136 of the Treaty on the Functioning of the Eu ropean Union with regard to a stability 
mechanism for Member  States whose currency is the euro1 adding the following paragraph to 
Article  136: "The Member States whose currency is the euro may establish a stability 
mechanism to be activated if indispensabl e to safeguard the stability of the euro area as a 
whole. The granting of any required financial assistance under the mechanism will be made 
subject to strict conditionality".  
 
(3) With a view to increasing the effectiveness of the financial assistance an d to prevent the risk 
of financial contagion, the Heads of State or Government of the Member  States whose 
currency is the euro agreed on 21 July 2011 to "increase [the] flexibility [of the ESM] linke d 
to appropriate conditionality ".  
 
                                                 
1 OJ L 91, 6.4.2 011, p. 1 . 
 
 
T/ESM 2012 -LT/en 4 (4) Strict observanc e of the European Union framework, the integrated macro -economic 
surveillance, in particular the Stability and Growth Pact, the macroeconomic imbalances 
framework and the economic governance rules of the European Union, should remain the first 
line of defe nce against confidence crises affecting the stability of the euro area.  
 
(5) On 9 December 2011 the Heads of State or Government of the Member States whose 
currency is the euro  agreed to move towards a stronger economic union including a new fiscal 
compac t and strengthened economic policy coordination  to be implement ed through  an 
international agreement , the Treaty  on Stability, Coordination  and Governance in the 
Economic and Monetary Union  ("TSCG "). The TSCG  will help develop a closer coordination 
within the euro area with a view to ensuring a lasting , sound and robus t management of public 
finances  and thus addresses one of the main sources of financial instability. This Treaty and 
the TSCG  are complementary in fostering fiscal responsibility and solidarit y within the 
economic and monetary union.  It is acknowledged and agreed that the granting of financial 
assistance in the framework of new programmes under the ESM  will be conditional, as 
of 1 March 2 013, on the ratification of the TSCG  by the ESM Member  concerned and, upon 
expiration of the transposition period referred to in Article 3(2) TSCG  on complianc e with the 
requirements of th at article . 
 
 
 
T/ESM 2012 -LT/en 5 (6) Given the strong interrelation within the euro area, severe risks to the financial stability of 
Member Stat es whose currency is the euro may put at risk the financial stability of the euro 
area as a whole. The ESM may therefore provide stability support on the basis of a strict 
conditionality, appropriate to the financial assistance instrument chosen if indispe nsable to 
safeguard the financial stability of the euro ar ea as a whole and of its Member  States. The 
initial maximum lending volume of the ESM  is set at EUR  500 000 million , including  the 
outstanding EFSF  stability  support . The adequacy of the consolidate d ESM and EFSF 
maximum lending volume will, however , be reassessed prior to the entry into force of th is 
Treaty . If appropriate , it will be increased  by the Board of Governors of the ESM , in 
accordance with Article 10 , upon entry into force of this Treaty .  
 
(7) All euro area Member States will become ESM Members. As a consequence of joining the 
euro area, a Member State of the European Union should become an ESM Member with full 
rights and obligations, in line with those of the Contracting Parties.  
 
(8) The ESM will cooperate very closely with the International Monetary Fund ("IMF") in 
providing stability support. The active participation of the IMF will be sought, both at 
technical and financial level. A euro area Member State requesting financial assistan ce from 
the ESM is expected to address, wherever possible, a similar request to the IMF.  
 
 
 
T/ESM 2012 -LT/en 6 (9) Member States of the European Union whose currency is not the euro ("non euro area 
Member  States") participating on an ad hoc basis alongside the ESM in a stabil ity support 
operation for euro area Member States will be invited to participate, as observers, in the ESM 
meetings when this stability support and its monitoring will be discussed. They will have 
access to all information in a timely manner and be properl y consulted.  
 
(10) On 20 June 2011, the representatives of the Governments of the Member States of 
the European Union authorised the Contracting Parties of this Treaty to request the 
European  Commission and the European Central Bank ("ECB") to perform the tasks provided 
for in this Treaty.  
 
(11) In its statement of 28 November 2010, the Euro Group stated that  standardised  and identical 
Collective Action Clauses ("CACs") will be included, in such a way as to preserve market 
liquidity, in the terms and condi tions of all new euro area government bonds. As requested by 
the European Council on 25 March 2011, the detailed legal arrangements for including CACs 
in euro area government securities were  finalised  by the E conomic and Financial Committee.  
 
(12) In accor dance with IMF practice, in exceptional cases an adequate and proportionate form of 
private sector involvement  shall be considered in cases where stability support is provided  
accompanied by conditionality in the form of a macro -economic adjustment program me.  
 
 
 
T/ESM 2012 -LT/en 7 (13) Like the IMF, the ESM will provide stability support to an ESM Member when its regular 
access to market financing is impaired or is at risk of being impaired. Reflecting this, Heads 
of State or Government have stated that the ESM loans will enj oy preferred creditor status in 
a similar fashion to those of the IMF, while accepting preferred creditor status of the IMF 
over the ESM. This status will be effective as of  the date of entry into force of this Treaty . In 
the event of ESM financial assista nce in the form of ESM loans following a European 
financial assistance programme existing at the time of the signature of this Treaty, the ESM 
will enjoy the same seniority as all other loans and obligations of the beneficiary 
ESM  Member, with the exceptio n of the IMF loans.  
 
(14) The euro area Member States will support equivalent creditor status of the ESM and that of 
other States lending bilaterally in coordination with the ESM.  
 
(15) ESM  lending conditions for Member States subject to a macroeconomic a djustment 
programme,  including  those  referred to in  Article 40 of this Treaty , shall cover the financing 
and operating costs of the ESM and s hould  be consistent with the lending conditions of the 
Financial Assistance Facility Agreement s signed between the EFSF, Ireland and the Central 
Bank of Ireland on the one hand and  the EFSF, the Portuguese Republic and Banco de 
Portugal on the other . 
 
 
 
T/ESM 2012 -LT/en 8 (16) Disputes concerning the interpretation and application of this Treaty arising between the 
Contracting Parties or between the Contracting Parties and the ESM should be submitted to 
the jurisdiction of the Court of Justice of the European Union, in accordance with Article  273 
of the Treaty on the Functioning of the European Union ("TFEU").  
 
(17) Post-programme surveil lance will be carried out by the European Commission and by 
the Council of the European Union within the framework laid down in Articles  121 
and 136 TFEU,  
 
HAVE  AGREED  AS FOLLOWS:  
 
 
T/ESM 2012 -LT/en 9 CHAPTER 1  
 
MEMBERSHIP AND PURPOSE  
 
 
ARTICLE 1  
 
Establishment and members  
 
1. By this Treaty, the Contracting Parties establish among themselves an international financial 
institution, to be named the "European Stability Mechanism" ("ESM").  
 
2. The Contracting Parties are ESM Members.  
 
 
ARTICLE 2  
 
New members  
 
1. Membership in t he ESM shall be open to the other Member States of the European  Union as 
from the entry into force of the decision of the Council of the European Union taken in accordance 
with Article  140(2) TFEU to abrogate their derogation from adopting the euro.  
 
 
 
T/ESM 2012 -LT/en 10 2. New ESM Members shall be admitted on the same terms and conditions as existing 
ESM  Members, in accordance with Article 44. 
 
3. A new member acceding to the ESM after its establishment shall receive shares in the ESM in 
exchange for its capital contribution , calculated in accordance with the contribution key provided 
for in Article  11. 
 
 
ARTICLE 3  
 
Purpose  
 
The purpose of the ESM shall be to mobilise funding and provide stability support under strict 
conditionality, appropriate to the financial assistance in strument chosen, to the benefit of ESM 
Members which are experiencing , or are threatened by , severe financing problems, if indispensable 
to safeguard the financial stability of the euro ar ea as a whole and of its Member  States. For this 
purpose, the ESM sh all be entitled to raise funds by issuing financial instruments or by entering into 
financial or other agreements or arrangements with ESM  Members, financial institutions or other 
third parties.  
 
 
 
 
T/ESM 2012 -LT/en 11 CHAPTER 2  
 
GOVERNANCE  
 
 
ARTICLE 4  
 
Structure and voting r ules 
 
1. The ESM shall have a Board of Governors and a Board of Directors, as well as a 
Managing  Director and other dedicated staff as may be considered necessary.  
 
2. The decisions of the Board of Governors and the Board of Directors  shall be taken by mu tual 
agreement, qualified majority or simple majority as specified in this Treaty. In respect of all 
decisions, a quorum of 2/3 of the members with voting rights representing at least 2/3 of the voting 
rights must be present.  
 
3. The adoption of a decisio n by mutual agreement requires the unanimity of the members 
participating in the vote. Abstentions do not prevent the adoption of a decision by 
mutual  agreement.  
 
 
 
T/ESM 2012 -LT/en 12 4. By way of derogation from paragraph 3, an emergency voting procedure shall be used where  
the Commission and the ECB both conclude that a failure to urgently adopt a decision to grant or 
implement financial assistance , as defined in Articles 13 to 18 , would threaten the economic and 
financial sustainability  of the euro area. The adoption of a decision by mutual agreement by the 
Board of Governors referred to in  points ( f) and ( g) of Article 5(6)  and the Board of Directors under 
that emergency procedure require s a qualified majority of 85% of the votes cast.  
 
Where the emergency  procedure  refer red to in the first subparagraph  is used, a transfer from the 
reserve fund and/or the paid -in capital to an emergency reserve fund is made in order to constitute a 
dedicated buffer to cover the risks arising from the financial support granted under th at em ergency  
procedure. The Board of Governors may decide to cancel the emergency reserve fund and transfer 
its content back to the reser ve fund and/or paid -in capital.  
 
5. The adoption of a decision by qualified majority requires 80  % of the votes cast.  
 
6. The adoption of a decision by simple majority requires a majority of the votes cast.  
 
7. The voting rights of each ESM Member, as exercised by its appointee or by the latter's 
representative on the Board of Governors or Board of Directors, shall be equal to  the number of 
shares allocated to it in the authorised capital stock of the ESM as set out in Annex  II.  
 
 
 
T/ESM 2012 -LT/en 13 8. If any ESM Member fails to pay any part of the amount due in respect of its obligations in 
relation to paid -in shares or calls of capital under A rticles 8, 9 and 10, or in relation to the 
reimbursement of the financial assistance under Article 1 6 or 17, such ESM  Member shall be 
unable, for so long as such failure continues, to exercise any of its voting rights. The voting 
thresholds shall be recalc ulated accordingly.  
 
 
ARTICLE 5  
 
Board of Governors  
 
1. Each ESM Member shall appoint a Governor and an alternate Governor. Such appointments 
are revocable at any time. The Governor shall be a member of the government of that ESM  Member 
who has responsibi lity for finance. The alternate Governor shall have full power to act on behalf of 
the Governor when the latter is not present.  
 
2. The Board of Governors shall decide either to be chaired by the President of the Euro  Group, 
as referred to in Protocol (No 14) on the Euro Group annexed to the Treaty on the European  Union 
and to the TFEU or to elect a Chairperson and a Vice -Chairperson from among its members for a 
term of two years. The Chairperson and the Vice -Chairperson may be re -elected. A new election 
shall be organised without delay if the incumbent no longer holds the function needed for being 
designated  Governor.  
 
 
 
T/ESM 2012 -LT/en 14 3. The Member of the European Commission in charge of economic and monetary affairs and 
the President of the ECB, as well as the President  of the Euro Group (if he or she is not the 
Chairperson or a Governor) may participate in the meetings of the Board of Governors as observers.  
 
4. Representatives of non -euro area Member States participating on an ad hoc  basis alongside 
the ESM in a stabi lity support operation for a euro area Member State shall also be invited to 
participate, as observers, in the meetings of the Board of Governors when this stability support and 
its monitoring will be discussed.  
 
5. Other persons, including representatives  of institutions or organisations, such as the IMF, may 
be invited by the Board of Governors to attend meetings as observers on an ad hoc  basis.  
 
6. The Board of Governors shall take the following decisions by mutual agreement:  
 
(a) to cancel the emergenc y reserve fund and transfer its content back to the reserve fund and/or 
paid-in capital, in accordance with Article 4(4);  
 
(b) to issue new shares on terms other than at par, in accordance with Article 8(2);  
 
(c) to make the capital calls, in accordance w ith Article 9(1);  
 
 
 
T/ESM 2012 -LT/en 15 (d) to change the authorised capital stock and adapt the maximum lending volume of the ESM, in 
accordance with Article 10(1);  
 
(e) to take into account a possible update of the key for the subscription of the ECB capital, in 
accordanc e with Article 11(3), and the changes to be made to Annex I in accordance with 
Article  11(6);  
 
(f) to provide stability support by the ESM, including the economic policy conditionality as 
stated in the memorandum of understanding referred to in Article 13( 3), and to establish the 
choice of instruments  and the financial terms and conditions , in accordance with Articles  12 
to 18;  
 
(g) to give a mandate to the European Commission to negotiate, in liaison with the ECB, the 
economic policy conditionality attach ed to each financial assistance, in accordance with 
Article  13(3);  
 
(h) to change the pricing policy and pricing guideline for financial assistance, in accordance with 
Article  20; 
 
(i) to change the list of financial assistance instruments that may be used  by the ESM, in 
accordance with Article 1 9; 
 
 
 
T/ESM 2012 -LT/en 16 (j) to establish the modalities of the transfer of EFSF support to the ESM, in accordance with 
Article  40; 
 
(k) to approve the application for membership of the ESM by new members, referred to in 
Article  44; 
 
(l) to make adaptations to this Treaty as a direct consequence of the accession of new members, 
including changes to be made to the distribution of capital among ESM Members and the 
calculation of such a distribution as a direct consequence of the accession  of a new member to 
the ESM, in accordance with Article 44; and  
 
(m) to delegate to the Board of Directors the tasks listed in this Article.  
 
7. The Board of Governors shall take the following decisions by qualified majority:  
 
(a) to set out the detailed  technical terms of accession of a new member to the ESM, in 
accordance with Article 44; 
 
(b) whether to be chaired by the President of the Euro Group or to elect, by qualified majority, the 
Chairperson and Vice -Chairperson of the Board of Governors, in ac cordance with 
paragraph  2; 
 
 
 
T/ESM 2012 -LT/en 17 (c) to set out by -laws of the ESM and the rules of procedure applicable to the Board of Governors 
and Board of Directors (including the right to establish committees and subsidiary bodies), in 
accordance with paragraph 9;  
 
(d) to determine the list of activities incompatible with the duties of a Director or an alternate 
Director, in accordance with Article 6(8);  
 
(e) to appoint and to end the term of office of the Managing Director, in accordance with 
Article  7;  
 
(f) to establi sh other funds, in accordance with Article 2 4; 
 
(g) on the actions to be taken for recovering a debt from an ESM Member, in accordance with 
Article  25(2) and (3);  
 
(h) to approve the annual accounts of the ESM, in accordance with Article  27(1); 
 
(i) to app oint the members of the Board  of Auditors , in accordance with Article  30(1) ; 
 
(j) to approve the external auditors, in accordance with Article 2 9; 
 
(k) to waive the immunity of the Chairperson of the Board of Governors, a Governor, alternate 
Governor, Dire ctor, alternate Director or the Managing Director, in accordance with 
Article  35(2); 
 
 
 
T/ESM 2012 -LT/en 18 (l) to determine the taxation regime applicable to the ESM staff, in accordance with 
Article  36(5); 
 
(m) on a dispute, in accordance with Article 3 7(2); and  
 
(n) any oth er necessary decision not explicitly provided for by this Treaty.  
 
8. The Chairperson shall convene and preside over the meetings of the Board of Governors. 
The Vice -Chairperson shall preside over these meetings when the Chairperson is unable 
to participa te. 
 
9. The Board of Governors shall adopt their rules of procedure and the by -laws of the ESM.  
 
 
ARTICLE 6  
 
Board of Directors  
 
1. Each Governor shall appoint one Director and one alternate Director from among people of 
high competence in economic and fi nancial matters. Such appointments shall be revocable at any 
time. The alternate Directors shall have full power to act on behalf of the Director when the latter is 
not present.  
 
 
 
T/ESM 2012 -LT/en 19 2. The Member of the European Commission in charge of economic and monetary  affairs and 
the President of the ECB may appoint one observer each.  
 
3. Represent atives of non -euro area Member States participating on an ad hoc  basis alongside 
the ESM in a financial assistance operation for a euro area Member State shall also be invit ed to 
participate, as observers, in the meetings of the Board of Directors when this financial assistance 
and its monitoring will be discussed.  
 
4. Other persons, including representatives of institutions or organisations, may be invited by the 
Board of Go vernors to attend meetings as observers on an ad hoc  basis.  
 
5. The Board of Directors shall take decisions by qualified majority, unless otherwise stated in 
this Treaty. Decisions to be taken on the basis of powers delegated by the Board of Governors shal l 
be adopted in accordance with the relevant voting rules set in Article 5(6) and (7).  
 
6. Without prejudice to the powers of the Board of Governors as set out in Article 5, the Board 
of Directors shall ensure that the ESM is run in accordance with this Tr eaty and the by -laws of the 
ESM adopted by the Board of Governors. It shall take decisions as provided for in this Treaty or 
which are delegated to it by the Board of Governors.  
 
 
 
T/ESM 2012 -LT/en 20 7. Any vacancy in the Board of Directors shall be immediately filled in acc ordance with 
paragraph  1.  
 
8. The Board of Governors shall lay down what activities are incompatible with the duties of a 
Director or an alternate Director, the by -laws of the ESM and rules of procedure of the Board 
of Directors.  
 
 
ARTICLE 7  
 
Managing Dir ector  
 
1. The Managing Director shall be appointed by the Board of Governors from among candidates 
having the nationality of an ESM Member, relevant international experience and a high level of 
competence in economic and financial matters. Whilst holding o ffice, the Managing Director may 
not be a Governor or Director or an alternate of either.  
 
2. The term of office of the Managing Director shall be five years. He or she may be 
re-appointed once. The Managing Director shall, however, cease to hold office wh en the Board of 
Governors so decides.  
 
 
 
T/ESM 2012 -LT/en 21 3. The Managing Director shall chair the meetings of the Board of Directors and shall participate 
in the meetings of the Board of Governors.  
 
4. The Managing Director shall be chief of the staff of the ESM. He or s he shall be responsible 
for organising, appointing and dismissing staff in accordance with staff rules to be adopted by the 
Board of Directors.  
 
5. The Managing Director shall be the legal representative of the ESM and shall conduct, under 
the direction of  the Board of Directors, the current business of the ESM.  
 
 
CHAPTER 3  
 
CAPITAL  
 
 
ARTICLE 8  
 
Authorised capital stock  
 
1. The authorised capital stock shall be EUR  704 798.7  million. It shall be divided into seven 
million forty -seven thousand nine hundred  and eighty -seven  shares, having a nominal value of 
EUR  100 000 each, which shall be available for subscription according to the initial contribution 
key provided for in Article 11 and calculated in Annex  I.  
 
 
 
T/ESM 2012 -LT/en 22 2. The authorised capital stock shall be divi ded into paid -in shares and callable shares. The 
initial total aggregate nominal value of paid -in shares shall be EUR  80 548.4  million. Shares of 
authorised capital stock initially subscribed shall be issued at par. Other shares shall be issued at 
par, unl ess the Board of Governors decides to issue them in special circumstances on other terms.  
 
3. Shares of authorised capital stock shall not be encumbered or pledged in any manner 
whatsoever and they shall not be transferable, with the exception of transfer s for the purposes of 
implementing adjustments of the contribution key provided for in Article 11 to the extent necessary 
to ensure that the distribution of shares corresponds to the adjusted key.   
 
4. ESM Members hereby irrevocably and unconditionally und ertake to provide their 
contribution to the authorised capital stock, in accordance with their contribution key in Annex  I. 
They shall meet all capital calls on a timely basis in accordance with the terms set out in this Treaty.  
 
 
 
T/ESM 2012 -LT/en 23 5. The liability of each ESM Member shall be limited, in all circumstances, to its portion of the 
authorised capital stock at its issue price. No ESM Member shall be liable, by reason of its 
membership, for obligations of the ESM. The obligations of ESM Members to contribute to th e 
authorised capital stock in accordance with this Treaty are not affected if any such ESM  Member 
becomes eligible for, or is receiving, financial assistance from the ESM.  
 
 
ARTICLE 9  
 
Capital calls  
 
1. The Board of Governors may call in authorised unpaid capital at any time and set an 
appropriate period of time for its payment by the ESM Members.  
 
2. The Board of Directors may call in authorised unpaid capital by simple majority decision to 
restore the level of paid -in capital if the amount of the latter is reduced by the absorption of losses 
below the level established in Article 8(2), as may be amended by the Board of Governors 
following the procedure provided for in Article 10, and set an appropriate period of time for its 
payment by the ESM Members.  
 
 
 
T/ESM 2012 -LT/en 24 3. The Managing Director shall call authorised unpaid capital in a timely manner if needed to 
avoid the ESM being in default of any scheduled or other payment obligation due to ESM creditors. 
The Managing Director shall inform the Board of Directors and t he Board of Governors of any such 
call. When a potential shortfall in ESM funds is detected, the Managing Director shall make such 
capital call(s) as soon as possible with a view to ensuring that the ESM shall have sufficient funds 
to meet payments due to creditors in full on their due date. ESM Members hereby irrevocably and 
unconditionally undertake to pay on demand any capital call made on them by the 
Managing  Director pursuant to this paragraph, such demand to be paid within seven days of receipt.  
 
4. The Board of Directors shall adopt the detailed terms and conditions which shall apply to 
calls on capital pursuant to this Article.  
 
 
ARTICLE 10  
 
Changes in authorised capital stock  
 
1. The Board of Governors shall review regularly and at least every fiv e years the maximum 
lending volume and the adequacy of the authorised capital stock of the ESM. It may decide to 
change the authorised capital stock and amend Article 8 and Annex II accordingly. Such decision 
shall enter into force after the ESM Members ha ve notified the Depositary of the completion of 
their applicable national procedures. The new shares shall be allocated to the ESM  Members 
according to the contribution key provided for in Article 11 and in Annex I.  
 
 
 
T/ESM 2012 -LT/en 25 2. The Board of Directors shall adopt  the detailed terms and conditions which shall apply to all 
or any capital changes made under paragraph 1.  
 
3. Upon a Member State of the European Union becoming a new ESM Member, the authorised 
capital stock of the ESM shall be automatically increased by  multiplying the respective amounts 
then prevailing by the ratio, within the adjusted contribution key provided for in Article  11, between 
the weighting of the new ESM Member and the weighting of the existing ESM Members.  
 
 
ARTICLE 11  
 
Contribution key  
 
1. The contribution key for subscribing to ESM authorised capital stock shall, subject to 
paragraphs  2 and 3, be based on the key for subscription, by the national central banks of 
ESM  Members, of the ECB's capital pursuant to Article 29 of Protocol (No 4) o n the Statute of the 
European System of Central Banks and of the European Central Bank (the "ESCB Statute") 
annexed to the Treaty on European Union and to the TFEU.  
 
2. The contribution key for the subscription of the ESM authorised capital stock is specif ied in 
Annex  I.  
 
 
 
T/ESM 2012 -LT/en 26 3. The contribution key for the subscription of the ESM authorised capital stock shall be 
adjusted  when:  
 
(a) a Member State of the European Union becomes a new ESM Member and the ESM's 
authorised capital stock automatically increases, a s specified in Article 10(3); or  
 
(b) the twelve year temporary correction applicable to an ESM Member established in accordance 
with Article  42 ends.  
 
4. The Board of Governors may decide to take into account possible updates to the key for the 
subscripti on of the ECB's capital referred to in paragraph 1 when the contribution key is adjusted in 
accordance with paragraph 3 or when there is a change in the authorised capital stock, as specified 
in Article  10(1).  
 
5. When the contribution key for the subscri ption of the ESM authorised capital stock is 
adjusted, the ESM Members shall transfer among themselves authorised capital stock to the extent 
necessary to ensure that the distribution of authorised capital stock corresponds to the adjusted key.  
 
6. Annex I shall be amended upon decision by the Board of Governors upon any adjustment 
referred to in this Article.  
 
7. The Board of Directors shall take all other measures necessary for the application of 
this Article.  
 
 
 
 
T/ESM 2012 -LT/en 27 CHAPTER 4  
 
OPERATIONS  
 
 
ARTICLE 12  
 
Principles  
 
1. If indispensable to safeguard the financial stability of the euro ar ea as a whole and of its 
Member  States, the ESM may provide stability support to an ESM Member subject to strict 
conditionality, appropriate to the financial assistance instrume nt chosen. Such conditionality may 
range from a macro -economic adjustment programme to continuous respect of pre -established 
eligibility conditions.  
 
2. Without prejudice to Article 19, ESM stability support may be granted through the 
instruments provided for in Articles 14 to 18.  
 
3. Collective action clauses shall be included , as of 1 January  2013, in all new euro area 
government securities, with maturity above one year, in a way which  ensures that their legal impact 
is identical . 
 
 
 
 
T/ESM 2012 -LT/en 28 ARTICLE 13  
 
Procedur e for granting stability support  
 
1. An ESM Member may address a request for stability support to the Chairperson of the Board 
of Governors. Such a request shall indicate the financial assistance instrument(s) to be considered. 
On receipt of such a reques t, the Chairperson of the Board of Gover nors shall entrust the 
European  Commission, in liaison with the ECB, with the following tasks:  
 
(a) to assess the existence of a risk to the financial stability of the euro area as a whole or of its 
Member States, un less the ECB has already submitted an analysis under Article 18(2); 
 
(b) to assess whether public debt is sustainable. Wherever appropriate and possible, such an 
assessment is expected to be conducted together with the IMF;  
 
(c) to assess the actual or pot ential financing needs of the ESM Member concerned.  
 
2. On the basis of the request of the ESM Member and  the assessment referred to in paragraph 1, 
the Board of Governors may decide to grant, in principle, stability support to the ESM Member 
concerned in the form of a financial assistance facility.  
 
 
 
T/ESM 2012 -LT/en 29 3. If a decision pursuant to paragraph 2 is adopted, the Board of Governors shall entrust the 
European Commission  – in liaison with the ECB and, wherever possible, together with the IMF – 
with the task of nego tiating , with the ESM Member concerned, a memorandum of understanding 
(an "MoU" ) detailing the conditionality attached to the financial assistance facility. The content of 
the MoU shall reflect the severity of the  weaknesses  to be addressed and the financi al assistance 
instrument chosen. In parallel, the Managing  Director of the ESM shall prepare a proposal for a 
financial assistance facility agreement, including the financial terms and conditions and the choice 
of instruments, to be adopted by the Board of  Governors.  
 
The MoU shall be fully consistent with the measures of economic policy coordination provided for 
in the TFEU, in particular with any act of European Union law, including any opinion, warning, 
recommendation or decision addressed to the ESM Mem ber concerned.  
 
4. The European Commission shall sign the MoU on behalf of the ESM, subject to prior 
compliance with the conditions set out in paragraph 3 and approval by the Board of Governors.  
 
5. The Board of Directors shall approve the financial assis tance facility agreement detailing the 
financial aspects of the stability support to be granted and, where applicable, the disbursement of 
the first tranche of the assistance.  
 
6. The ESM shall establish an appropriate warning system to ensure that it rec eives any 
repayments due by the ESM Member under the stability support in a timely manner.  
 
 
 
T/ESM 2012 -LT/en 30 7. The European Commission – in liaison with the ECB and, wherever possible, together with 
the IMF – shall be entrusted with monitoring compliance with the condit ionality attached to the 
financial assistance facility .  
 
 
ARTICLE 1 4 
 
ESM precautionary financial assistance  
 
1. The Board of Governors may decide to grant precautionary financial assistance in the form of 
a precautionary conditioned credit line or in th e form of a n enhanced conditions credit  line in 
accordance with Article 12(1).  
 
2. The conditionality attached to the ESM precautionary financial assistance shall be detailed in 
the MoU, in accordance with Article 13(3).  
 
3. The financial terms and conditi ons of the ESM precautionary financial assistance shall be 
specified in a precautionary financial assistance facility agreemen t, to be signed by the 
Managing  Director.  
 
 
 
T/ESM 2012 -LT/en 31 4. The Board of Directors shall adopt the detailed guidelines on the modalities for i mplementing 
the ESM precautionary financial assistance.  
 
5. The Board of Directors shall decide by mutual agreement on a proposal from the 
Managing  Director and after having received a report from the European  Commission in 
accordance with Article 13(7), w hether the credit line should be maintained.  
 
6. After the ESM Member has drawn funds for the first time  (via a loan or a primary market 
purchase) , the Board of Directors shall decide by mutual agreement on a proposal from the 
Managing Director and based on an assessment conducted by the European Commission , in liaison 
with the ECB, whether the credit line continues to be  adequate or whether another form of financial 
assistance is needed.  
 
 
ARTICLE 1 5 
 
Financial assistance for the re -capitalisation of fina ncial institutions of an ESM Member  
 
1. The Board of Governors may decide to grant financial assistance through loans to an 
ESM  Member for the specific purpose of re -capitalis ing the financial institutio ns of that 
ESM  Member.  
 
 
 
T/ESM 2012 -LT/en 32 2. The conditionality attach ed to financial assistance for the re -capitalisation of an 
ESM  Member's financial institutions shall be detailed in the MoU, in accordance with Article 13(3).  
 
3. Without prejudice to Article s 107 and 108 TFEU, the financial terms and conditions of 
financ ial assistance for the re -capitalisation of an ESM Member's financial institutions shall be 
specified in a financial assistance facility agreement, to be signed by the Managing Director.  
 
4. The Board of Directors shall adopt the detailed guidelines on th e modalities for implementing 
financial assistance for the re -capitalisation of an ESM Member's financial institutions.  
 
5. Where applicable, the Board of Directors shall decide  by mutual agreement , on a proposal 
from the Managing Director and after having  received a report from the European  Commission in 
accordance with Article 13(7) , the disbursement of the tranches of the financial assistance 
subsequent to the first tranche.  
 
 
 
 
T/ESM 2012 -LT/en 33 ARTICLE 1 6 
 
ESM loans  
 
1. The Board of Governors may decide to grant financi al assistance in the form of a loan to an 
ESM Member, in accordance with Article  12.  
 
2. The conditionality attached to the ESM loans shall be contained in a macro -economic 
adjustment programme detailed in the MoU, in accordance with Article 13(3).  
 
3. The financial terms and conditions of each  ESM  loan shall be specified in a financial 
assistance facility agreement, to be signed by the Managing Director.  
 
4. The Board of Directors shall adopt the detailed guidelines on the modalities for implementing 
ESM loans.  
 
5. The Board of Director s shall decide  by mutual agreement, on a pro posal from the 
Managing  Director and after having received a report from the European  Commission in 
accordance with Article 13(7) , the disbursement of the tranches of the financia l assistance 
subsequent to the first  tranche.  
 
 
 
 
T/ESM 2012 -LT/en 34 ARTICLE 1 7 
 
Primary market support facility  
 
1. The Board of Governors may decide to arrange for the purchase of bonds of an ESM  Member 
on the primary market, in accordance with Article 12 and with the obje ctive of maximising the cost 
efficiency of the financial assistance.  
 
2. The conditionality attached to the primary market support facility shall be detailed in the 
MoU, in accordance with Article 13(3).  
 
3. The financial terms and conditions under which t he bond purchase is conducted shall be 
specified in a financial assistance facility agreement, to be signed by the Managing Director.  
 
4. The Board of Directors shall adopt the detailed guidelines on the modalities for implementing 
the primary market supp ort facility.  
 
5. The Board of Directors shall decide  by mutual agreement, on a proposal from the Managing 
Director and after having received a report from the Europea n Commission in accordance 
with Article 13(7) , the disbursement of financial assistance t o a beneficiary Member State through 
operations on the primary market.  
 
 
 
T/ESM 2012 -LT/en 35 ARTICLE 1 8 
 
Secondary market support facility  
 
1. The Board of Governors may decide to arrange for operations on the secondary market in 
relation to the bonds of an ESM Member in acc ordance with Article 12(1).  
 
2.  Decisions on interventions on the secondary market to address contagion shall be taken on 
the basis of an analysis of the ECB recogni sing the existence of exceptional financial market 
circumstances and risks to financial st ability.  
 
3. The conditionality attached to the secondary market support facility shall be detailed in the 
MoU, in accordance with Article 13(3).  
 
4. The financial terms and conditions under which the secondary market operations are to be 
conducted shall b e specified in a financial assistance facility agreement, to be signed by the 
Managing Director.  
 
5. The Board of Directors shall adopt the detailed guidelines on the modalities for implementing 
the secondary market support facility.  
 
6. The Board of Dire ctors shall decide  by mutual agreement , on a proposal from the Managing 
Director , to initiate operations on the secondary market.  
 
 
 
 
T/ESM 2012 -LT/en 36 ARTICLE 1 9 
 
Review of the list of financial assistance instruments  
 
The Board of Governors may review the list of financia l assistance instruments provided for in 
Articles  14 to 18 and decide to make changes to it.  
 
 
ARTICLE 20 
Pricing policy   
 
 
1. When granting  stability support, the ESM shall aim to fully cover its financing and operating 
costs and shall include an appropri ate margin.  
 
2. For all financial assistance instruments, pricing shall  be detailed in a pricing guideline, which 
shall be adopted by the Board of Governors.  
 
3. The pricing policy may be reviewed by the Board of Governors.   
 
 
 
T/ESM 2012 -LT/en 37 ARTICLE 21 
 
Borrowing operat ions 
 
1. The ESM shall be empowered to borrow on the capital markets from banks, financial 
institutions or other persons or institutions for the performance of its purpose.  
 
2. The modalities of the borrowing operations shall be determined by the Managing Director, in 
accordance with detailed guidelines to be adopted by the Board of Directors.  
 
3. The ESM shall use appropriate risk management tools, which shall be reviewed regularly by 
the Board of Directors.  
 
 
 
 
T/ESM 2012 -LT/en 38 CHAPTER 5  
 
FINANCIAL MANAGEMENT  
 
 
ARTICLE 22 
 
Investment policy  
 
1. The Managing Director shall implement a prudent investment policy for the ESM, so as to 
ensure its highest creditworthiness, in accordance with guidelines to be adopted and reviewed 
regularly by the Board of Directors. The ESM shall  be entitled to use part of the return on its 
investment portfolio to cover its operating and administrative costs.  
 
2. The operations of the ESM shall comply with the princip les of sound financial and 
risk management.  
 
 
 
 
T/ESM 2012 -LT/en 39 ARTICLE 23 
 
Dividend policy  
 
1. The Board of Directors may decide, by simple majority, to distribute a dividend to the 
ESM  Members where the amount of paid-in capital and the reserve fund  exceed the level required  
for the ESM  to maintain its lending capacity and  where  proceeds from the inv estment are not 
required to avoid a payment shortfall to creditors. Dividends are distributed pro rata  to the 
contributions to the paid -in capital, taking into account the possible acceleration referred to  in 
Article 41(3).  
 
2. As long as the ESM has not provided financial assistance to one of its members, the proceeds 
from the investment of the ESM paid -in capital shall be returned to the ESM Members according to 
their respective contributions to the paid -in capital, after deductions for operational costs , provided 
that the targeted effective lending capacity is fully available.  
 
3. The Managing Director shall implement the dividend policy for the ESM in accordance with 
guidelines to be adopted by the Board of Directors.  
 
 
 
 
T/ESM 2012 -LT/en 40 ARTICLE 2 4 
 
Reserve and other f unds  
 
1. The Board of Governors shall establish a reserve fund and, where appropriate, other funds.  
 
2. Without prejudice to Article 23, the net income generated by the ESM operations and the 
proceeds of the financial sanctions received from the ESM Member s under the multilateral 
surveillance procedure, the excessive deficit procedure and the macro -economic imbalances 
procedure established under the TFEU shall be put aside in a reserve fund.  
 
3. The resources of the reserve fund shall be invested in accorda nce with guidelines to be 
adopted by the Board of Directors.  
 
4. The Board of Directors shall adopt such rules as may be required for the establishment, 
administration and use of other funds.  
 
 
 
 
T/ESM 2012 -LT/en 41 ARTICLE 2 5 
 
Coverage of losses  
 
1. Losses arising in the ESM  operations shall be charged:  
 
(a) firstly, against the reserve fund;  
 
(b) secondly, against the paid -in capital; and  
 
(c) lastly, against an appropriate amount of the authorised unpaid capital, which shall be called in 
accordance with Article 9(3).  
 
2. If an ESM Member fails to meet the required payment under a capital call made pursuant to 
Article  9(2) or (3), a revised increased capital call shall be made to all ESM Members with a view 
to ensuring that the ESM receives the total amount of paid -in capita l needed. The Board of 
Governors shall decide an appropriate course of action for ensuring that the ESM  Member 
concerned settles its debt to the ESM within a reasonable period of time. The Board of Governors 
shall be entitled to require the payment of defa ult interest on the overdue amount.  
 
3. When an ESM Member settles its debt to the ESM, as referred to in paragraph 2, the excess 
capital shall be returned to the other ESM Members in accordance with rules to be adopted by the 
Board of Governors.  
 
 
 
 
T/ESM 2012 -LT/en 42 ARTI CLE 2 6 
 
Budget  
 
The Board of Directors shall approve the ESM budget annually.  
 
 
ARTICLE 2 7 
 
Annual accounts  
 
1. The Board of Governors shall approve the annual accounts of the ESM.  
 
2. The ESM shall publish an annual report containing an audited statement of its accounts and 
shall circulate to ESM Members a quarterly summary statement of its financial position and a profit 
and loss statement showing the results of its operations.  
 
 
ARTICLE 2 8 
 
Internal Audit  
 
An internal audit function shall be established  according to international standards.  
 
 
 
 
T/ESM 2012 -LT/en 43 ARTICLE 2 9 
 
External audit  
 
The accounts of the ESM shall be audited by independent external auditors approved by the Board 
of Governors  and responsible for certifying the annual financial statements . The external auditors 
shall have full power to examine all books and accounts of the ESM and obtain full information 
about its transactions.  
 
 
ARTICLE 30 
 
Board of Auditors  
 
1. The Board of Auditors  shall consist of five members appointed by the Board of Governors for 
their competence in auditing and financial matters  and shall include  two members from the supreme 
audit institutions of the ESM Members - with a rotation between the latter - and one from the 
European Court of Auditors.  
 
 
 
T/ESM 2012 -LT/en 44 2. The members of the Board of Auditors shall be independent. They shall neither seek nor take 
instructions from the ESM governing bodies, the ESM Members  or any other public or 
private  body.  
 
3. The Board of Auditors  shall draw up independent audits. It shall  inspect the ESM accounts 
and verify that the operational accounts and balance sheet are in order. It shall have full access to 
any document of the ESM needed for the implementation of its tasks.  
 
4. The Board of Auditors  may inform the Board of Directors at any time of its findings.  It shall , 
on an annual basis, draw up a report to be submitted to the Board of Governors .  
 
5. The Board of Governors shall make the annual report accessible to the national p arliaments 
and supreme audit institutions of the ESM Members and to the European  Court of Auditors.  
 
6. Any matter relating  to this Article shall be detailed in the by -laws of the ESM . 
 
 
 
 
T/ESM 2012 -LT/en 45 CHAPTER 6  
 
GENERAL PROVISIONS  
 
 
ARTICLE 31 
 
Location  
 
1. The ESM shall have its seat and principal office in Luxembourg.  
 
2. The ESM may establish a  liaison office in Brussels.  
 
 
ARTICLE 32 
 
Legal status, privileges and immunities  
 
1. To enable the ESM to fulfil its purpose, the legal status and the privileges and immunities set 
out in this Article shall be accorded to the ESM in the territory of each  ESM Member. The ESM 
shall endeavour to obtain recognition of its legal status and of its privileges and immunities in other 
territories in which it performs functions or holds assets.  
 
 
 
T/ESM 2012 -LT/en 46 2. The ESM shall have full legal personality; it shall have full leg al capacity to:  
 
(a) acquire and dispose of movable and immovable property;  
 
(b) contract;  
 
(c) be a party to legal proceedings; and  
 
(d) enter into a headquarter agreement and/or protocols as necessary for ensuring that its legal 
status and its privileg es and immunities are recognised and enforced.  
 
3. The ESM, its property, funding and assets, wherever located and by whomsoever held, shall 
enjoy immunity from every form of judicial process except to the extent that the ESM expressly 
waives its immunity  for the purpose of any proceedings or by the terms of any contract, including 
the documentation of the funding instruments.  
 
4. The property, funding and assets of the ESM shall, wherever located and by whomsoever 
held, be immune from search, requisition,  confiscation, expropriation or any other form of seizure, 
taking or foreclosure by executive, judicial, administrative or legislative action.  
 
5. The archives of the ESM and all documents belonging to the ESM or held by it, shall 
be inviolable.  
 
 
 
T/ESM 2012 -LT/en 47 6. The premises of the ESM shall be inviolable.  
 
7. The official communications of the ESM shall be accorded by each ESM Member and by 
each state which has recognised the legal status and the privileges and immunities of the ESM, the 
same treatment as it accords to the official communications of an ESM Member.  
 
8. To the extent necessary to carry out the activities provided for in this Treaty, all property, 
funding and assets of the ESM shall be free from restrictions, regulations, controls and moratoria of 
any nature.  
 
9. The ESM shall be exempted from any requirement to be authorised or licensed as a credit 
institution, investment services provider or other authorised licensed or regulated entity under the 
laws of each ESM  Member . 
 
 
ARTICLE 33 
 
Staff of the ESM  
 
The Board of Directors shall lay down the conditions of employment of the Managing Director and 
other staff of the ESM.  
 
 
 
 
T/ESM 2012 -LT/en 48 ARTICLE 34 
 
Professional secrecy  
 
The Members or former Members of the Board of Governors and of the Board of Directors and any 
other persons who work or have worked for or in connection with the ESM shall not disclose 
information that is subject to professional secrecy. They shall be required, even after their duties 
have ceased, not to disclose information of the kind covered by the  obligation of 
professional  secrecy.  
 
 
ARTICLE 3 5 
 
Immunities of persons  
 
1. In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate 
Governors, Directors, alternate Directors, as well as the Managing Director and other staff members 
shall be immune from legal proceedings with respect to acts performed by them in their official 
capacity and shall enjoy inviolability in respect of their official papers and documents.  
 
 
 
T/ESM 2012 -LT/en 49 2. The Board of Governors may waive to such extent and  upon such conditions as it determines 
any of the immunities conferred under this Article in respect of the Chairperson of the Board of 
Governors, a Governor, an alternate Governor, a Director, an alternate Director or the 
Managing  Director.  
 
3. The Manag ing Director may waive any such immunity in respect of any member of the staff 
of the ESM other than himself or herself.  
 
4. Each ESM Member shall promptly take the action necessary for the purposes of giving effect 
to this Article in the terms of its own law and shall inform the ESM accordingly.  
 
 
ARTICLE 3 6 
 
Exemption from taxation  
 
1. Within the scope of its official activities, the ESM, its assets, income, property and its 
operations and transactions authorised by this Treaty shall be exempt from all d irect taxes.  
 
2. The ESM Members shall, wherever possible, take the appropriate measures to remit or refund 
the amount of indirect taxes or sales taxes included in the price of movable or immovable property 
where the ESM makes, for its official use, subst antial purchases, the price of which includes taxes 
of this kind.  
 
 
 
T/ESM 2012 -LT/en 50 3. No exemption shall be granted in respect of taxes and dues which amount merely to charges 
for public utility services.  
 
4. Goods imported by the ESM and necessary for the exercise of its official activities shall be 
exempt from all import duties and taxes and from all import prohibitions and restrictions.  
 
5. Staff of the ESM shall be subject to an internal tax for the benefit of the ESM on salaries and 
emoluments paid by the ESM, sub ject to rules to be adopted by the Board of Governors. From the 
date on which this tax is applied, such salaries and emoluments shall be exempt from national 
income  tax.  
 
6. No taxation of any kind shall be levied on any obligation or security issued by t he ESM 
including any interest or dividend thereon by whomsoever held:  
 
(a) which discriminates against such obligation or security solely because of its origin; or  
 
(b) if the sole jurisdictional basis for such taxation is the place or currency in which it  is issued, 
made payable or paid, or the location of any office or place of business maintained by 
the ESM.  
 
 
 
 
T/ESM 2012 -LT/en 51 ARTICLE 3 7 
 
Interpretation and dispute settlement  
 
1. Any question of interpretation or application of the provisions of this Treaty and the by -laws 
of the ESM arising between any ESM Member and the ESM, or between ESM Members, shall be 
submitted to the Board of Directors for its decision.  
 
2. The Board of Governors shall decide on any dispute arising between an ESM Member and 
the ESM, or between  ESM Members, in connection with the interpretation and application of this 
Treaty, including any dispute about the compatibility of the decisions adopted by the ESM with this 
Treaty. The votes of the member(s) of the Board of Governors of the ESM Member(s ) concerned 
shall be suspended when the Board of Governors votes on such decision and the voting threshold 
needed for the adoption of that decision shall be recalculated accordingly.  
 
3. If an ESM Member contests the decision referred to in paragraph 2, t he dispute shall be 
submitted to the Court of Justice of the European Union. The judgement of the Court of Justice of 
the European Union shall be binding on the parties in the procedure, which shall take the necessary 
measures to comply with the judgment w ithin a period to be decided by said Court.  
 
 
 
 
T/ESM 2012 -LT/en 52 ARTICLE 3 8 
 
International cooperation  
 
The ESM shall be entitled, for the furtherance of its purposes, to cooperate, within the terms of this 
Treaty, with the IMF, any State which provides financial assistance  to an ESM Member on an 
ad hoc basis and any international organisation or entity having specialised responsibilities in 
related  fields.  
 
 
CHAPTER 7  
 
TRANSITIONAL ARRANGEMENTS  
 
 
ARTICLE 3 9 
 
Relation with EFSF lending  
 
During the transitional phase spanning  the period from the entry into force of this Treaty  until the 
complete run -down of the EFSF, the consolidated ESM and EFSF lending shall not exceed 
EUR  500 000 million, without prejudice to the regular review of the adequacy of the maximum 
lending volume in accordance with Article  10. The Board of Directors shall adopt detailed 
guidelines on the calculation of the forward commitment capacity to ensure that the consolidated 
lending ceiling is not breached.  
 
 
 
 
T/ESM 2012 -LT/en 53 ARTICLE 40 
 
Transfer of EFSF supports  
 
1. By way  of derogation from Article 13, the Board of Governors may decide that the EFSF 
commitments to provide financial assistance to an ESM Member under its agreement with that 
member shall be assumed by the ESM as far as such commitments relate to undisbursed a nd 
unfunded parts of loan facilities.  
 
2. The ESM may, if authorised by its Board of Governors, acquire the rights and assume the 
obligations of the EFSF, in particular in respect of all or part of its outstanding rights and 
obligations under, and related to, its existing loan facilities.  
 
3. The Board of Governors shall adopt the detailed modalities necessary to give effect to the 
transfer of the obligations from the EFSF to the ESM, as referred to in paragraph 1 and any transfer 
of rights and obligations  as described in paragraph 2.  
 
 
 
 
T/ESM 2012 -LT/en 54 ARTICLE 41 
 
Payment of the initial capital  
 
1. Without prejudice to paragraph 2, payment of paid -in shares of the amount initially 
subscribed by each ESM Member shall be made in five annual instalments of  20 % each of the total 
amount. The first instalment shall be paid by each ESM Member within fifteen days of the date of 
entry into force of this Treaty. The remaining four instalments shall each be payable on the first, 
second, third and fourth anniversary of the payment d ate of the first  instalment.  
 
2. During the five -year period of capital payment by instalments, ESM Members shall accelerate 
the payment of  paid-in shares , in a timely manner prior to the issuance date , in order to maintain a 
minimum  15 % ratio between pa id-in capital and the outstanding amount of ESM issuances  and 
guarantee a minimum combined lending capacity of the ESM and  of the  EFSF of EUR  500 000 
million .  
 
3. An ESM Member may decide to accelerate the payment of its share of paid -in capital.  
 
 
 
 
T/ESM 2012 -LT/en 55 ARTIC LE 42 
 
Temporary correction of the contribution key  
 
1. At inception, the ESM Members shall subscribe the authorised capital stock on the basis of 
the initial contribution key as specified in Annex I. The temporary correction included in this initial 
contr ibution key shall apply for a period of twelve years after the date of adoption of the euro by the 
ESM  Member concerned.  
 
2. If a new ESM Member's gross domestic product (GDP) per capita at market prices in euro in 
the year immediately preceding its acces sion to the ESM is less than  75 % of the European  Union 
average GDP per capita at market prices, then its contribution key for subscribing to ESM 
authorised capital stock, determined in accordance with Article  10, shall benefit from a temporary 
correction and equal the sum of:  
 
(a) 25 % of the percentage share in the ECB capital of the national central bank of that 
ESM  Member, determined in accordance with Article 29 of the ESCB Statute; and  
 
(b) 75 % of that ESM Member's percentage share in the gross natio nal income (GNI) at market 
prices in euro of the euro area in the year immediately preceding its accession to the ESM.  
 
 
 
T/ESM 2012 -LT/en 56 The percentages referred to in points (a) and (b) shall be rounded up or down to the nearest multiple 
of 0,0001 percentage points. The  statistical terms shall be those published by Eurostat.  
 
3. The temporary correction referred to in paragraph 2 shall apply for a period of twelve years 
from the date of adoption of the euro by the ESM Member concerned.  
 
4. As a result of the temporary c orrection of the key, the relevant proportion of shares allocated 
to an ESM  Member pursuant to paragraph 2 shall be reallocated amongst the ESM  Members not 
benefiting from a temporary correction on the basis of their shareholding in the ECB, determined in 
accordance with Article  29 of the ESCB Statute, subsisting immediately prior to the issue of shares 
to the acceding ESM Member.  
 
 
ARTICLE 43 
 
First appointments  
 
1. Each ESM Member shall designate its Governor and alternate Governor within the two weeks 
of the entry into force of this Treaty.  
 
2. The Board of Governors shall appoint the Managing Director and each Governor shall appoint 
a Director and an alternate Director within the two months of the entry into force of this Treaty.  
 
 
 
 
T/ESM 2012 -LT/en 57 CHAPTER 8  
 
FINAL PROV ISIONS  
 
 
ARTICLE 44 
 
Accession  
 
This Treaty shall be open for accession by other Member States of the European  Union in 
accordance with Article 2 upon application for membership that any such Member  State of the 
European  Union shall file with the ESM after  the adoption by the Council of the European  Union of 
the decision to abrogate its derogation from adopting the euro in accordance with Article  140(2) 
TFEU. The Board of Governors shall approve the application for accession of the new 
ESM  Member and the de tailed technical terms related thereto, as well as the adaptations to be made 
to this Treaty as a direct consequence of the accession. Following the approval of the application for 
membership by the Board of Governors, new ESM Members shall accede upon the  deposit of the 
instruments of accession with the Depositary, who shall notify other ESM Members thereof.  
 
 
T/ESM 2012 -LT/en 58 ARTICLE 4 5 
 
Annexes  
 
The following Annexes to this Treaty shall constitute an integral part thereof:  
 
1) Annex I: Contribution key of the ESM; and 
 
2) Annex II: Subscriptions to the authorised capital stock . 
 
 
ARTICLE 4 6 
 
Deposit  
 
This Treaty shall  be deposited with the General Secretariat of the Council of the European  Union 
("the  Depositary"), which shall communicate certified copies to all the sign atories.  
 
 
 
 
T/ESM 2012 -LT/en 59 ARTICLE 4 7 
 
Ratification, approval or acceptance  
 
1. This Treaty shall be subject to ratification, approval or acceptance by the signatories. 
Instruments of ratification, approval or acceptance shall be deposited with the Depositary.  
 
2. The Depositary shall notify the other signatories of each deposit and the date thereof.  
 
 
ARTICLE 4 8 
 
Entry into force  
 
1. This Treaty shall enter into force on the date when instruments of ratification, approval or 
acceptance have been deposited by signatori es whose initial subscriptions represent no less 
than 90% of the total subscriptions set forth in Annex  II. Where appropriate, the list of ESM 
Members shall be adjusted; the key in Annex  I shall then be recalculated and the total authorised 
capital stock i n Article 8(1) and Annex  II and the initial total aggregated nominal value of paid -in 
shares in Article 8(2) shall be reduced accordingly.  
 
 
 
T/ESM 2012 -LT/en 60 2. For each signatory which thereafter deposits its instrument of ratification, approval or 
acceptance, this Treaty  shall enter into force on the day following the date of deposit.  
 
3. For each State which accedes to this Treaty in accordance with Article  44, this Treaty shall 
enter into force on the twentieth day following the deposit of its instrument of accession.  
 
 
Done at Brussels on the second day of February in the year two thousand and twelve  in a single 
original, whose Dutch, English, Estonian, Finnish, French, German, Greek, Irish, Italian, Maltese, 
Portuguese, Slovak, Slovenian, Spanish and Swedish texts ar e equally authentic, which shall be 
deposited in the archives of the Depositary which shall transmit a duly certified copy to each of the 
Contracting  Parties.  
 
Upon accession of the Republic of Latvia, the Latvian text shall be equally authentic, which sh all be 
deposited in the archives of the Depositary which shall transmit a duly certified copy to each of the 
Contracting Parties . 
 
Upon accession of the Republic of Lithuania, the Lithuanian text shall be equally authentic, which 
shall be deposited in the archives of the Depositary which shall transmit a duly certified copy to 
each of the Contracting Parties.  
 
 
 
T/ESM 2012 -LT/Annex I/en 1 ANNEX I  
 
 
Contribution Key of the ESM  
 
ESM Member  ESM key (%)  
 
Kingdom of Belgium  3.4534  
Federal Republic of Germany  26.9616  
Republic of Eston ia  0.1847  
Ireland  1.5814  
Hellenic Republic  2.7975  
Kingdom of Spain  11.8227  
French Republic  20.2471  
Italian Republic  17.7917  
Republic of Cyprus  0.1949  
Republic of Latvia  0.2746  
Republic of Lithuania  0.4063  
Grand Duchy of Luxembourg  0.2487  
Malta  0.0726  
Kingdom of the Netherlands  5.6781  
Republic of Austria  2.7644  
Portuguese Republic  2.4921  
Republic of Slovenia  0.4247  
Slovak Republic  0.8184  
Republic of Finland  1.7852  
Total  100.0 
 
The above figures are rounded to fou r decimals.  
___________________  
 
 
T/ESM 2012 -LT/Annex II/en 1 ANNEX II  
 
 
Subscriptions to the authorised capital stock  
 
ESM Member  
 Number of shares  
 Capital subscription 
(EUR)  
Kingdom of Belgium  243 397  24 339 700 000  
Federal Republic of Germany  1 900 248  190 024 800 000  
Republic of Estonia  13 020  1 302 000 000  
Ireland  111 454  11 145 400 000  
Hellenic Republic  197 169  19 716 900 000  
Kingdom of Spain  833 259  83 325 900 000  
French Republic  1 427 013  142 701 300 000  
Italian Republic  1 253 959  125 395 900 000  
Republic of Cyprus  13 734 1 373 400 000  
Republic of Latvia  19 353  1 935 300 000  
Republic of Lithuania  
Grand Duchy of Luxembourg  28 634  
17 528  2 863 400 000  
1 752 800 000  
Malta  5 117  511 700 000  
Kingdom of the Netherlands  400 190  40 019 000 000  
Republic of Austria  194 838  19 483 800 000  
Portuguese Republic  175 644  17 564 400 000  
Republic of Slovenia  29 932  2 993 200 000  
Slovak Republic  57 680  5 768 000 000  
Republic of Finland  125 818  12 581 800 000  
Total  7 047 987  704 798 700 000  
 
 
___________________