CELEX: 51990PC0190
Language: en
Date: 1990-05-07
Title: PROPOSAL FOR A COUNCIL DECISION ON THE CONCLUSION OF THE ARTICLES OF AGREEMENT ESTABLISHING A EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

26. 9. 90                                  Official Journal of the European Communities                                  No C 241/1
                                                                   II
                                                           (Preparatory Acts)
                                                      COMMISSION
                Proposal for Council Decision on the conclusion of the Articles of Agreement establishing the
                                        European Bank for Reconstruction and Development
                                                        COM(90) 190 final/2
                                          (Submitted by the Commission on 8 May 1990)
                                                            (90/C 241/01)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                               its membership and have established Articles of Agreement to
                                                                       that end;
Having regard to the Treaty instituting the European
Economic Community, and in particular Article 235                      Whereas conclusion of the Articles of Agreement by the
thereof,                                                               European Economic Community is necessary to achieve the
                                                                       Community's objectives in the field of economic external
Having regard to the proposal by the Commission,                       relations and whereas the Treaty has not provided other
                                                                       powers therefor than those in Article 235,
Having regard to the opinion of Parliament,
Whereas the people of Central and Eastern Europe have close            HAS DECIDED AS FOLLOWS:
historical ties with the people of the Community and whereas
these ties are being strengthened by agreements for
cooperation and trade;                                                                             Article 1
                                                                       The Articles of Agreement establishing a European Bank for
Whereas the countries of Central and Eastern Europe are                Reconstruction and Development, hereinafter referred to
committed to the fundamental principles of multiparty                  respectively as the 'Articles of Agreement' and the 'EBRD' are
democracy, the rule of law, and respect for human rights and           hereby approved on behalf of the European Economic
whereas these countries are willing to implement reforms in            Community. The text of the Articles of Agreement is
order to evolve towards market-oriented economies;                     annexed to this Decision.
Whereas the economic reforms will contribute in a significant
way to the vigorous development of economic relations                                              Article 2
between those countries and the Community and whereas
this will help promote throughout the Community a                      The Governor and Alternate Governor of the EBRD
harmonious development of economic activities;                         representing the Community under Article 23 (1) of the
                                                                       Articles of Agreement shall be appointed by the
Whereas the transition to market-oriented economies will               Commission.
require considerable investment principally in the private
sector but also in the public sector; whereas the establishment
                                                                                                   Article 3
of a special bank could help supply the finance necessary for
such investment;                                                       1.     The Commission shall designate the institution to act
                                                                       as depository under Article 34 (1) of the Articles of
Whereas 40 countries together with the European Economic               Agreement.
Community and the European Investment Bank have
signified their intention of becoming members of a European            2.     The Commission shall be the official entity with which
Bank for Reconstruction and Development which is                       the EBRD may communicate as laid down in Article 34 (2) of
European in its basic character and broadly international in           the Articles of Agreement.
 ---pagebreak--- No C 241/2                                    Official Journal of the European Communities                                            26. 9. 90
               AGREEMENT ESTABLISHING THE EUROPEAN BANK FOR RECONSTRUCTION AND
                                                              DEVELOPMENT
               The Contracting Parties,
               Committed to the fundamental principles of multiparty democracy, the rule of law, respect for human rights and
               market economics;
               Recalling the Final Act of the Helsinki Conference on Security and Cooperation in Europe, and in particular its
               Declaration on Principles;
               Welcoming the intent of Central and Eastern European countries to further the practical implementation of
               multiparty democracy, strengthening democratic institutions, the rule of law and respect for human rights and
               their willingness to implement reforms in order to evolve towards market-oriented economies;
               Considering the importance of close and coordinated cooperation in order to promote the economic progress of
               Central and Eastern European countries to help their economies become more internationally competitive and
               assist them in their reconstruction and development and thus to reduce, where appropriate, any risks related to the
               financing of their economies;
               Convinced that the establishment of a multilateral financial institution which is European in its basic character and
               broadly international in its membership would help serve these ends and would constitute a new and unique
               structure of cooperation in Europe;
               Have agreed to establish hereby the European Bank for Reconstruction and Development (hereinafter called 'the
               Bank') which shall operate in accordance with the following:
                            CHAPTER I                                                 expansion      of    productive,       competitive    and
                                                                                      private-sector activity, in particular small          and
        PURPOSE, FUNCTIONS AND MEMBERSHIP                                             medium-sized enterprises;
                                                                                 (ii) to mobilize domestic and foreign capital and
                              Article 1                                               experienced management to the end described in
                               Purpose                                                (i);
                                                                               (iii) to foster productive investment, including in the
In contributing to economic progress and reconstruction, the                          service and financial sectors, and in related
purpose of the Bank shall to be foster the transition towards                         infrastructure where that is necessary to support
open market-oriented economies and to promote private and                             private and entrepreneurial initiative, thereby
entrepreneurial initiative in the Central and Eastern                                 assisting in making a competitive environment and "
European countries committed to and applying the principles                           raising productivity, the standard of living and
of multiparty democracy, pluralism and market                                         conditions of labour;
economics.
                                                                                (iv) to provide technical assistance for the preparation,
                                                                                      financing and implementation of relevant projects,
                                                                                      whether individual or in the context of specific
                              Article 2
                                                                                      investment programmes;
                             Functions
                                                                                 (v) to stimulate and encourage the development of capital
                                                                                      markets;
1.     To fulfil on a long-term basis its purpose of fostering
the transition of Central and Eastern European countries                        (vi) to give support to sound and economically viable
towards open market-oriented economies and the promotion                              projects involving more than one recipient member
of private and entrepreneurial initiative, the Bank shall assist                      country;
the recipient member countries to implement structural and
sectoral economic reforms, including demonopolization,                         (vii) to promote in the full range of its activities
decentralization and privatization, to help their economies                           environmentally sound and sustainable development;
become fully integrated into the international economy by                             and
measures:
   (i) to promote, through private and other interested                       (viii) to undertake such other activities and provide such
       investors, the establishment, improvement and                                  other services as may further these functions.
 ---pagebreak--- 26. 9. 90                                  Official Journal of the European Communities                                  No C 241/3
2.     In carrying out the functions referred to in paragraph 1                                   Article 5
of this Article, the Bank shall work in close cooperation with
all its members and, in such manner as it may deem                                         Subscription of shares
appropriate within the terms of this Agreement, with the
International Monetary Fund, the International Bank for
Reconstruction and Development, the International Finance             1.     Each member shall subscribe to shares of the capital
Corporation, the Multilateral Investment Guarantee                    stock of the Bank, subject to fulfilment of the member's legal
Agency, and the Organization for Economic Cooperation                 requirements. Each subscription to the original authorized
and Development, and shall cooperate with the United                  capital stock shall be for paid-in shares and callable shares in
Nations and its Specialized Agencies and other related                the proportion of three to seven. The initial number of shares
bodies, and any entity, whether public or private, concerned          available to be subscribed to by Signatories to this Agreement
with the economic development of, and investment in,                  which become members in accordance with Article 61 of this
Central and Eastern European countries.                               Agreement shall be that set forth in Annex A. No member
                                                                      shall have an initial subscription of less than 100 shares.
                                                                      2.     The initial number of shares to be subscribed to by
                            Article 3                                 countries which are admitted to membership in accordance
                                                                      with paragraph 2 of Article 3 of this Agreement shall be
                          Membership                                  determined by the Board of Governors; provided, however,
                                                                      that no such subscription shall be authorized which would
                                                                      have the effect of reducing the percentage of capital stock
1.     Membership in the Bank shall be open:                          held by countries which are members of the European
                                                                      Economic Community, together with the European
 (i) to (1) European countries and (2) non-European
                                                                      Economic Community and the European Investment Bank,
     countries which are members of the International                 below the majority of the total subscribed capital stock.
     Monetary Fund; and
(ii) to the European Economic Community and the                       3.     The Board of Governors shall at intervals of not more
     European Investment Bank.                                        than five years review the capital stock of the Bank. In case of
                                                                      an increase in the authorized capital Steele, each member
2.     Countries eligible for membership under paragraph 1            shall have a reasonable opportunity to subscribe, under such
of this Article, which do not become members in accordance            uniform terms and conditions as the Board of Governors
with Article 61 of this Agreement, may be admitted, under             shall determine, to a proportion of the increase in stock
such terms and conditions as the Bank may determine, to               equivalent to the proportion which its stock subscribed bears
membership in the Bank upon the affirmative vote of not less          to the total subscribed capital stock immediately prior to
than two-thirds of the Governors, representing not less than          such increase. No member shall be obliged to subscribe to
three-fourths of the total voting power of the members.               any part of an increase of capital stock.
                                                                      4.     Subject to the provisions of paragraph 3 of this Article,
                                                                      the Board of Governors may, at the request of a member,
                                                                      increase the subscription of that member, or allocate shares
                                                                      to that member within the authorized capital stock which are
                          CHAPTER II
                                                                      not taken up by other members; provided, however, that
                            CAPITAL                                   such increase shall not have the effect of reducing the
                                                                      percentage of capital stock held by countries which are
                                                                      members of the European Economic Community, together
                                                                      with the European Economic Community and the European
                            Article 4                                 Investment Bank, below the majority of the total subscribed
                                                                      capital stock.
                    Authorized capital stock
                                                                      5.     Shares of stock initially subscribed to by members shall
1.     The original authorized capital stock shall be ECU             be issued at par. Other shares shall be issued at par unless the
10 000 million. It shall be divided into one million shares,          Board of Governors, by a vote of not less than two-thirds of
having a par value of ECU 10 000 each, which shall be                 the Governors, representing not less than two-thirds of the
available for subscription only by members in accordance              total voting power of the members, decides to issue them in
with the provisions of Article 5 of this Agreement.                   special circumstances on other terms.
2.     The original capital stock shall be divided into paid-in       6.     Shares of stock shall not be pledged or encumbered in
shares and callable shares. The initial total aggregate par           any manner whatsoever, and they shall not be transferable
value of paid-in shares shall be ECU 3 000 million.                   except to the Bank in accordance with Chapter VII of this
                                                                      Agreement.
3.     The authorized capital stock may be increased at such
time and under such terms as may seem advisable, by a vote            7.     The liability of the members on shares shall be limited
of not less than two-thirds of the Governors, representing not        to the unpaid portion of their issue price. No member shall be
less than three-fourths of the total voting power of the              liable, by reason of its membership, for obligations of the
members.                                                              Bank.
 ---pagebreak--- No C 241/4                                  Official Journal of the European Communities                                     26. 9. 90
                            Article 6                                  7.     For subscriptions other than those described in
                                                                       paragraphs 1, 2 and 3 of this Article, payments by a member
                                                                       in respect of subscription to paid-in shares in the authorized
                   Payment of subscriptions
                                                                       capital stock shall be made in ecus, in United States dollars or
                                                                       in Japanese yen whether in cash or in promissory notes or in
                                                                       other obligations.
 1.    Payment of the paid-in shares of the amount initially
subscribed to by each Signatory to this Agreement, which               8.     For the purposes of this Article, payment or
becomes a member in accordance with Article 61 of this                 denomination in ecus shall include payment or denomination
                                                                       in any fully convertible currency which is equivalent on the
Agreement, shall be made in five instalments of 20 % each of
                                                                       date of payment or encashment to the value of the relevant
such amount. The first instalment shall be paid by each
                                                                       obligation in ecus.
member within 60 days after the date of the entry into force
of this Agreement, or after the date of deposit of its
instrument of ratification, acceptance or approval in
accordance with Article 6 1 , if this latter is later than the date                                Article 7
of the entry into force. The remaining four instalments shall
each become due successively one year from the date on                                    Ordinary capital resources
which the preceding instalment became due and shall each,
subject to the legislative requirements of each member, be             As used in this Agreement, the term 'ordinary capital
paid.                                                                  resources' of the Bank shall include the following:
                                                                         (i) authorized capital stock of the Bank, including both
2.     5 0 % of payment of each instalment pursuant to                       paid-in and callable shares, subscribed to pursuant to
paragraph 1 of this Article, or by a member admitted in                      Article 5 of this Agreement;
accordance with paragraph 2 of Article 3 of this Agreement,             (ii) funds raised by borrowings of the Bank by virtue of
may be made in promissory notes or other obligations issued                  powers conferred by subparagraph (i) of Article 20 of
by such member and denominated in ecus, in United States                     this Agreement, to which the commitment to calls
dollars or in Japanese yen, to be drawn down as the Bank                     provided for in paragraph 4 of Article 6 of this
needs funds for disbursement as a result of its operations.                  Agreement is applicable;
Such notes or obligations shall be non-negotiable,
non-interest-bearing and payable to the Bank at par value              (iii) funds received in repayment of loans or guarantees and
upon demand. Demands upon such notes or obligations                          proceeds from the disposal of equity investment made
shall, over reasonable periods of time, be made so that the                  with the resources indicated in subparagraphs (i) and
value of such demands in ecus at the time of demand from                     (ii) of this Article;
each member is proportional to the number of paid-in shares            (iv) income derived from loans and equity investment,
subscribed to and held by each such member depositing such                   made from the resources indicated in subparagraphs (i)
notes or obligations.                                                        and (ii) of this Article, and income derived from
                                                                             guarantees and underwriting not forming part of the
3.     All payment obligations of a member in respect of                     special operations of the Bank; and
subscription to shares in the initial capital stock shall be            (v) any other funds or income received by the Bank which
settled either in ecus, in United States dollars or in Japanese              do not form part of its Special Funds resources referred
yen on the basis of the average exchange rate of the relevant                to in Article 19 of this Agreement.
currency in terms of the ecu for the period from 30 September
1989 to 31 March 1990 inclusive.
4.     Payment of the amount subscribed to the callable                                          CHAPTER III
capital stock of the Bank shall be subject to call, taking
account of Articles 17 and 42 of this Agreement, only as and                                     OPERATIONS
when required by the Bank to meet its liabilities.
                                                                                                   Article 8
5.     In the event of a call referred to in paragraph 4 of this
                                                                                  Recipient countries and use of resources
Article, payment shall be made by the member in ecus, in
United States dollars or in Japanese yen. Such calls shall be
uniform in ecu value upon each callable share calculated at            1.     The resources and facilities of the Bank shall be used
the time of the call.                                                  exclusively to implement the purpose and carry out the
                                                                       functions set forth, respectively, in Articles 1 and 2 of this
                                                                       Agreement.
6.     The Bank shall determine the place for any payment
under this Article not later than one month after the                  2.     The Bank may conduct its operations in countries from
inaugural meeting of its Board of Governors, provided that,            Central and Eastern Europe which are proceeding steadily in
before such determination, the payment of the first                    the transition towards market-oriented economies and the
instalment referred to in paragraph 1 of this Article shall be         promotion of private and entrepreneurial initiative, and
made to the European Investment Bank, as trustee for the               which apply, by concrete steps and otherwise, the principles
Bank.                                                                  as set forth in Article 1 of this Agreement.
 ---pagebreak--- ^ , ^ 0                                              Official journal of the European Communities                                     c^oC^tB^
^.     In cases where a member mi^ht he implementing                            held, used, committed, m^estedorotherwisedisposedof
policies which are inconsistent with Article! of this                           entirely separately from each other. The financial statements
Agreement, or in exceptional circumstances, the ^oard of                        ofthe^an^shallshowthereser^esoftheBanl^go^etherwith
directors shall considerwhether access byamemberto^anl^                         its ordinary operations, and, separately, its special
resources shouldhesuspendedor otherwise modified and                            operations.
maymal^erecommendationsaccordm^ly t o t h e ^ o a r d o f
C^o^ernors.Any decision on these matters shall betaken by
                                                                                2.      The ordinary capital resources of the ^anle shall under
the ^oard of governors hy a majority of not less than
                                                                                nocircumstances bechar^ed with, or used todischar^e,
twoDthirds of the C^o^ernors, representing not less than
                                                                                losses or liabilities arising out of special operations or other
threefourths of the total ^otin^ power of the members.
                                                                                activities for which special rounds resources were originally
                                                                                used or committed.
^.    ^   Any potential recipient country may request that
          the ^anl^ provide access to its resources for limited
          p u r p o s e s o ^ e r a p e n o d o f three yearsbe^mnm^            ^.      L^penses appertaining directly to ordinary operations
          after the entry into force of this Agreement, Any                     shall bechar^ed to theordmarycapitalresourcesofthe^anm
          such request shall he attached as an integral part of                 L^penses appertaining directly to special operations shall be
          this Agreement as soon as it is made.                                 charged to special l^unds resources. Any other expenses
                                                                                shall,sub^ecttopara^raphlof Article l^ofthis Agreement,
     ^     tOunn^suchapenod^                                                    be charged as the ^anl^ shall determine.
          ^      the ^anl^ shall provide to suchacountry,and
                 to enterprises in its territory, upon their
                 request,technical assistance and othertypesof
                 assistancedirectedtofmanceitspn^atesector,
                 to facilitate the transition of ^tateDowned                                                A r ^ ^
                 enterprises to private ownership and control,
                 and        to       help        enterprises     operating
                 competitively and mo^m^ to participation in                                          methods of operation
                 themarleetonentedeconomy,suh^ecttothe
                 proportion set forth m para^raph^ of
                 ArticleMofthisA^reement^                                       1.      The ^anl^ shall carry out its operations in furtherance
          d^ the total amount of any assistance thus                            of its purpose and functions as set out in A r t i c l e s l a n d ^ o f
                 provided shall not exceed the total amount of                  this A^reementmany or all of the following ways.
                 cash disbursed and promissorynotes issued hy
                 that country for its shares.                                     ^d by mal^in^, or cofinancin^ together with multilateral
                                                                                       institutions, commercial banl^s or other interested
    ^nd Atthe end ofthis period,the decision to allow such                             sources, or participating in, loans to pn^ateDsector
          a country access beyond the limits specified in                              enterprises, loans to any ^tate^owned enterprise
          subpa^a^raphs^ and d^ shallbetaleenby the                                    operating competitively and mo^in^ to participationm
          ^oard of (Governors byama^onty of not less than                              the marl^et^oriented economy, and loans to any
          threefourthsoftheC^o^ernorsrepresentm^notless                                ^tateDowned enterprise to facilitate its transition to
          than ^ ^ of the total ^otm^ power of the                                     private ownership and controls in particular to
          members.                                                                     facihtateorenhancetheparticipationofpn^ateand^or
                                                                                       foreign capital in such enterprises^
                                                                                 ^id ^      by investment in the            equity      capital      of
                                  A r ^ ^                                                   pn^ateDsector enterprises^
                Ordinary and special operations                                        ^d by investment in the equity capital of any
                                                                                            ^tateDowned enterprise operating competitively
                                                                                            and      mo^in^     to    participation        in       the
The operations of the ^anl^ shall consist of ordinary                                       marleetonented economy,and investment in the
operations financed from the ordinary capital resources of                                  equity capital of any ^tateDowned enterprise to
the^anl^referredtoinArticle^ofthisA^reementandspecial                                       facilitate its t^ansitiontopn^ateownershipand
operations financed from the special rounds resources                                       cont^ol^ in particular to facilitate or enhance the
referred to in Article l^ofthis Agreement.The two types of                                  participation of private and^or foreign capital in
operations may be combined.                                                                 such enterprises^ and
                                                                                       ^    by underwntm^,where other means of financing
                                                                                             are not appropriate, the equity issue of securities
                                                                                            by both pri^ate^sector enterprises and such
                                 Ar^^^
                                                                                            ^tate^owned enterprises referred t o m ^ a b o ^ e f o r
                                                                                            the ends mentioned in that subparagraphs
                      reparation of operations
                                                                                ^nd by facilitating access to domestic and international
P      The ordinary capital resources and the special ^unds                            capitalmarl^etsbypri^ateDsectorenterprisesor by other
resources of the ^anl^ shall at all times and in all respects be                       enterprises referred to in s u b p a r a g r a p h s of this
 ---pagebreak--- No C 241/6                                  Official Journal of the European Communities                                      26. 9. 90
      paragraph for the ends mentioned in that                                    (b) a loan or guarantee to, or equity investment in,
      subparagraph, through the provision of guarantees,                               a    State-owned       enterprise    which     is
      where other means of financing are not appropriate,                              implementing a programme to achieve private
       and through financial advice and other forms of                                 ownership and control shall not be considered
       assistance;                                                                     as made to the State sector;
(iv) by deploying Special Funds resources in accordance                           (c) loans to a financial intermediary for onlending
      with the agreements determining their use; and                                   to the private sector shall not be considered as
                                                                                       made to the State sector.
 (v) by making or participating in loans and providing
      technical assistance for the reconstruction or
      development         of      infrastructure,       including
      environmental         programmes,        necessary       for
      private-sector development and the transition to a                                           Article 12
      market-oriented economy.
                                                                                     Limitations on ordinary operations
For the purposes of this paragraph, a State-owned enterprise
shall not be regarded as operating competitively unless it
operates autonomously in a competitive market environment              1.      The total amount of outstanding loans, equity
and unless it is subject to bankruptcy laws.                           investments and guarantees made by the Bank in its ordinary
                                                                       operations shall not be increased at any time, if by such
                                                                       increase the total amount of its unimpaired subscribed
2.    (i) The Board of Directors shall review at least
                                                                       capital, reserves and surpluses included in its ordinary capital
           annually the Bank's operations and lending strategy
                                                                       resources would be exceeded.
           in each recipient country to ensure that the purpose
           and the functions of the Bank, as set out in
           Articles 1 and 2 of this Agreement, are fully served.       2.      The amount of any equity investment shall not
           Any decision pursuant to such a review shall be             normally exceed such percentage of the equity capital of the
           taken by a majority of not less than two-thirds of          enterprise concerned as shall be determined, by a general
           the Directors, representing not less than                   rule, to be appropriate by the Board of Directors. The Bank
           three-fourths of the total voting power of the              shall not seek to obtain by such an investment a controlling
           members.                                                    interest in the enterprise concerned and shall not exercise
                                                                       such control or assume direct responsibility for managing
     (ii) The said review shall involve the consideration of,          any enterprise in which it has an investment, except in the
           inter alia, each recipient country's progress made          event of actual or threatened default on any of its
           on decentralization, demonopolization and                   investments, actual or threatened insolvency of the enterprise
           privatization and the relative shares of the Bank's         in which such investment shall have been made, or other
           lending to private enterprises, to State-owned              situations which, in the opinion of the Bank, threaten to
           enterprises in the process of transition to                 jeopardize such investment, in which case the Bank may take
           participation in the market-oriented economy or             such action and exercise such rights as it may deem necessary
           privatization, for infrastructure, for technical            for the protection of its interests.
           assistance, and for other purposes.
                                                                       3.      The amount of the Bank's disbursed equity investments
3.    (i) Not more than 4 0 % of the amount of the Bank's              shall not at any time exceed an amount corresponding to its
           total committed loans, guarantees and equity                total unimpaired paid-in subscribed capital, surpluses and
           investments, without prejudice to its other                 general reserve.
           operations referred to in this Article, shall be
           provided to the State sector. Such percentage limit         4.      The Bank shall not issue guarantees for export credits
           shall apply initially over a two-year period, from          nor undertake insurance activities.
           the date of commencement of the Bank's
           operations, taking one year with another, and
           thereafter in respect of each subsequent financial
           year.
                                                                                                   Article 13
     (ii) For any country, not more than 4 0 % of the
           amount of the Bank's total committed loans,
                                                                                             Operating principles
           guarantees and equity investments over a period of
           five years, taking one year with another, and
           without prejudice to the Bank's other operations
                                                                       The Bank shall operate in accordance with the following
           referred to in this Article, shall be provided to the
                                                                       principles:
           State sector.
                                                                           (i) the Bank shall apply sound banking principles to all its
    (iii) For the purposes of this paragraph:
                                                                               operations;
           (a) the State sector includes national and local
                governments, their agencies, and enterprises              (ii) the operations of the Bank shall provide for the
                owned or controlled by any of them;                            financing of specific projects, whether individual or in
 ---pagebreak--- 26. 9. 90                                     Official Journal of the European Communities                                 No C 241/7
         the context of specific investment programmes, and                      are used only for the purposes for which the loan or the
         for technical assistance, designed to fulfil its purpose                equity investment was granted and with due attention
         and functions as set out in Articles 1 and 2 of this                    to considerations of economy and efficiency.
         Agreement;
  (iii) the Bank shall not finance any undertaking in the
         territory of a member if that member objects to such
                                                                                                     Article 14
         financing;
                                                                                Terms and conditions for loans and guarantees
  (iv) the Bank shall not allow a disproportionate amount of
         its resources to be used for the benefit of any
         member;
                                                                         1.     In the case of loans made, participated in, or
                                                                         guaranteed by the Bank, the contract shall establish the terms
   (v) the Bank shall seek to maintain                  reasonable       and conditions for the loan or the guarantee concerned,
         diversification in all its investments;                         including those relating to payment of principal, interest and
                                                                         other fees, charges, maturities and dates of payment in
  (vi) before a loan, guarantee or equity investment is                  respect of the loan or the guarantee, respectively. In setting
         granted, the applicant shall have submitted an                  such terms and conditions, the Bank shall take fully into
         adequate proposal and the President of the Bank shall           account the need to safeguard its income.
         have presented to the Board of Directors a written
         report regarding the proposal, together with                    2.     Where the recipient of loans or guarantees of loans is
         recommendations, on the basis of a staff study;                 not itself a member, but is a State-owned enterprise, the Bank
                                                                         may, when it appears desirable, bearing in mind the different
 (vii) the Bank shall not undertake any financing, or provide            approaches appropriate to public and State-owned
         any facilities, when the applicant is able to obtain            enterprises in transition to private ownership and control,
         sufficient financing or facilities elsewhere on terms           require the member or members in whose territory the
         and conditions that the Bank considers reasonable;              project concerned is to be carried out, or a public agency or
                                                                         any instrumentality of such member or members acceptable
                                                                         to the Bank, to guarantee the repayment of the principal and
(viii) in providing or guaranteeing financing, the Bank shall            the payment of interest and other fees and charges of the loan
         pay due regard to the prospect that the borrower and            in accordance with the terms thereof. The Board of Directors
         its guarantor, if any, will be in a position to meet their      shall review annually the Bank's practice in this matter,
         obligations under the financing contract;                       paying due attention to the Bank's creditworthiness.
  (ix) in case of a direct loan made by the Bank, the borrower           3. ' The loan or guarantee contract shall expressly state the
         shall be permitted by the Bank to draw its funds only           currency or currencies, or ecus, in which all payments to the
         to meet expenditure as it is actually incurred;                 Bank thereunder shall be made.
   (x) the Bank shall seek to revolve its funds by selling its
         investments to private investors whenever it can
         apropriately do so on satisfactory terms;
                                                                                                     Article 15
  (xi) . in its investments in individual enterprises, the Bank
         shall undertake its financing on terms and conditions                                Commission and fees
         which it considers appropriate, taking into account
         the requirements of the enterprise, the risks being
         undertaken by the Bank, and the terms and conditions            1.     The Bank shall charge, in addition to interest, a
         normally obtained by private investors for similar              commission on loans made or participated in as part of its
         financing;                                                      ordinary operations. The terms and conditions of this
                                                                         commission shall be determined by the Board of
 (xii) the Bank shall place no restriction upon the                      Directors.
         procurement of goods and services from any country
         from the proceeds of any loan, investment or other              2.     In guaranteeing a loan as part of its ordinary
         financing undertaken in the ordinary or special                 operations, or in underwriting the sale of securities, the Bank
         operations of the Bank, and shall, in all appropriate           shall charge fees, payable at rates and times determined by
         cases, make its loans and other operations conditional          the Board of Directors, to provide suitable compensation for
         on international invitations to tender being arranged;          its risks.
         and
                                                                         3.     The Board of Directors may determine any other
(xiii) the Bank shall take the necessary measures to ensure              charges of the Bank in its ordinary operations and any
         that the proceeds of any loan made, guaranteed or               commission, fees or other charges in its special
         participated in by the Bank, or any equity investment,          operations.
 ---pagebreak--- No C 241 / 8                                Official Journal of the European Communities                                       26. 9. 90
                            Article 16                                 each Special Fund. Such rules and regulations shall be
                                                                       consistent with the provisions of this Agreement, except for
                         Special Reserve                               those provisions expressly applicable only to ordinary
                                                                       operations of the Bank.
1.     The amount of commissions and fees received by the
Bank pursuant to Article 15 of this Agreement shall be set
aside as a special reserve which shall be kept for meeting the                                       Article 19
losses of the Bank in accordance with Article 17 of this
Agreement. The special reserve shall be held in such liquid                                  Special Funds resources
form as the Bank may decide.
                                                                       The term 'Special Funds resources' shall refer to the resources
2.     If the Board of Directors determines that the size of the       of any Special Fund and shall include:
special reserve is adequate, it may decide that all or part of the
said commission or fees shall henceforth form part of the                (i) funds accepted by the Bank for inclusion in any Special
income of the Bank.                                                            Fund;
                                                                        (ii) funds repaid in respect of loans or guarantees, and the
                                                                               proceeds of equity investments, financed from the
                            Article 17                                         resources of any Special Fund which, under the rules
                                                                               and regulations governing that Special Fund, are
          Methods of meeting the losses of the Bank                            received by such Special Fund; and
                                                                       (iii) income derived from investment of Special Funds
1.     In the Bank's ordinary operations, in cases of arrears or               resources.
default on loans made, participated in, or guaranteed by the
Bank, and in cases of losses on underwriting and in equity
investment, the Bank shall take such action as it deems
appropriate. The Bank shall maintain appropriate provisions
against possible losses.                                                                           CHAPTER IV
2.     Losses arising in the Bank's ordinary operations shall             BORROWING AND OTHER MISCELLANEOUS POWERS
be charged:
  (i) first, to the provisions referred to in paragraph 1 of this                                    Article 20
      Article;
                                                                                                 General Powers
 (ii) second, to net income;
(iii) third, against the special reserve provided for in               1.       The Bank shall have, in addition to the powers
      Article 16 of this Agreement;                                    specified elsewhere in this Agreement, the power to:
(iv) fourth, against its general reserve and surpluses;                  (i) borrow funds in member countries or elsewhere,
                                                                               provided always that:
 (v) fifth, against the unimpaired paid-in capital; and
                                                                               (a) before making a sale of its obligations in the
(vi) last, against an appropriate amount of the uncalled                            territory of a country, the Bank shall have obtained
      subscribed callable capital which shall be called in                          its approval; and
      accordance with the provisions of paragraphs 4 and 5                     (b) where the obligations of the Bank are to be
      of Article 6 of this Agreement.                                               denominated in the currency of a member, the
                                                                                     Bank shall have obtained its approval;
                                                                          (ii) invest or deposit funds not needed in its operations;
                            Article 18
                                                                         (iii) buy and sell securities, in the secondary market, which
                          Special Funds                                        the Bank has issued or guaranteed or in which it has
                                                                               invested;
1.     The Bank may accept the administration of Special                 (iv) guarantee securities in which it has invested in order to
Funds which are designed to serve the purpose and come                         facilitate their sale;
within the functions of the Bank. The full cost of
                                                                          (v) underwrite, or participate in the underwriting of,
administering any such Special Fund shall be charged to that
                                                                               securities issued by any enterprise for purposes
Special Fund.
                                                                               consistent with the purpose and functions of the
2.     Special Funds accepted by the Bank may be used in any                   Bank;
manner and on any terms and conditions consistent with the               (vi) provide technical advice and assistance which serve its
purpose and the functions of the Bank, with the other                          purpose and come within its functions;
applicable provisions of this Agreement, and with the
agreement or agreements relating to such Funds.                         (vii) exercise such other powers and adopt such rules and
                                                                               regulations as may be necessary or appropriate in
3.     The Bank shall adopt such rules and regulations as may                  furtherance of its purpose and functions, consistent
be required for the establishment, administration and use of                   with the provisions of this Agreement; and
 ---pagebreak--- 26. 9. 90                                 Official Journal of the European Communities                                 No C 241/9
(viii) conclude agreements of cooperation with any public or                                      Article 23
       private entity or entities.
                                                                                    Board of Governors: Composition
2.      Every security issued or guaranteed by the Bank shall
bear on its face a conspicuous statement to the effect that it is
not an obligation of any government or member, unless it is
                                                                     1.      Each member shall be represented on the Board of
in fact the obligation of a particular government or member,
                                                                     Governors and shall appoint one Governor and one
in which case it shall so state.
                                                                     Alternate. Each Governor and Alternate shall serve at the
                                                                     pleasure of the appointing member. No Alternate may vote
                                                                     except in the absence of his or her principal. At each of its
                                                                     annual meetings, the Board shall elect one of the Governors
                                                                     as Chairman who shall hold office until the election of the
                          CHAPTER V                                  next Chairman.
                          CURRENCIES
                                                                     2.      Governors and Alternates shall serve as such without
                                                                     remuneration from the Bank.
                           Article 21
             Determination and use of currencies
                                                                                                  Article 24
1.      Whenever it shall become necessary under this
Agreement to determine whether any currency is fully                                   Board of Governors: powers
convertible for the purposes of this Agreement, such
determination shall be made by the Bank, taking into account
the paramount need to preserve its own financial interests,
                                                                     1.      All the powers of the Bank shall be vested in the Board
after consultation, if necessary, with the International
                                                                     of Governors.
Monetary Fund.
2.      Members shall not impose any restrictions on the             2.      The Board of Governors may delegate to the Board of
receipt, holding, use or transfer by the Bank of the                 Directors any or all of its powers, except the power to:
following:
                                                                         (i) admit new members and determine the conditions of
  (i) currencies or ecus received by the Bank in payment of                  their admission;
       subscriptions to its capital stock, in accordance with
       Article 6 of this Agreement;                                     (ii) increase or decrease the authorized capital stock of the
                                                                             Bank;
 (ii) currencies obtained by the Bank by borrowing;
                                                                       (iii) suspend a member;
(iii) currencies and other resources administered by the
       Bank as contributions to special Funds; and                     (iv) decide appeals from interpretations or applications of
(iv) currencies received by the Bank in payment on account                   this Agreement given by the Board of Directors;
       of principal, interest, dividends or other charges in
       respect of loans or investments, or the proceeds of              (v) authorize the conclusion of general agreements for
       disposal of such investments made out of any of the                   cooperation with other international organizations;
       funds referred to in subparagraphs (i) to (iii) of this
                                                                       (vi) elect the Directors and the President of the Bank;
       paragraph, or in payment of commission, fees or other
       charges.
                                                                      (vii) determine the remuneration of the Directors and
                                                                             Alternate Directors and the salary and other terms of
                                                                             the contract of service of the President;
                                                                     (viii) approve, after reviewing the auditors' report, the
                          CHAPTER VI                                         general balance sheet and the statement of profit and
                                                                             loss of the Bank;
            ORGANIZATION AND MANAGEMENT
                                                                       (ix) determine the reserves and the allocation            and
                                                                             distribution of the net profits of the Bank;
                           Article 22
                                                                        (x) amend this Agreement;
                            Structure
                                                                       (xi) decide to terminate the operations of the Bank and to
                                                                              distribute its assets; and
The Bank shall have a Board of Governors, a Board of
Directors, a President, one or more Vice-Presidents and such          (xii) exercise such other powers as are expressly assigned to
other officers and staff as may be considered necessary.                     the Board of Governors in this Agreement.
 ---pagebreak--- No C 241/10                               Official Journal of the European Communities                                      26. 9. 90
3.     The Board of Governors shall retain full power to             Directors, as well as representing members whose Governors
exercise authority over any matter delegated or assigned to          have elected them, may also represent members who assign
the Board of Directors under paragraph 2 of this Article, or         their votes to them.
elsewhere in this Agreement.
                                                                     2.     Directors shall be persons of high competence in
                                                                     economic and financial matters and shall be elected in
                                                                     accordance with Annex B.
                          Article 25
                                                                     3.     The Board of Governors may increase or decrease the
                                                                     size, or revise the composition, of the Board of Directors, in
                Board of Governors: procedure
                                                                     order to take into account changes in the number of members
                                                                     of the Bank, by an affirmative vote of not less than two-thirds
1.     The Board of Governors shall hold an annual meeting           of the Governors, representing not less than three-fourths of
and such other meetings as may be provided for by the Board          the total voting power of the members. Without prejudice to
or called by the Board of Directors. Meetings of the Board of        the exercise of these powers for subsequent elections, the
Governors shall be called, by the Board of Directors,                number and composition of the second Board of Directors
whenever requested by not less than five members of the              shall be as set out in paragraph 1 of this Article.
Bank or members holding not less than one-quarter of the
total voting power of the members.                                   4.     Each Director shall appoint an Alternate with full
                                                                     power to act for him or her when he or she is not present.
2.     Two-thirds of the Governors shall constitute a quorum         Directors and Alternates shall be nationals of member
for any meeting of the Board of Governors, provided such             countries. No member shall be represented by more than one
majority represents not less than two-thirds of the total            Director. An Alternate may participate in meetings of the
voting power of the members.                                         Board but may vote only when he or she is acting in place of
                                                                     his or her principal.
3.     The Board of Governors may by regulation establish a
                                                                     5.     Directors shall hold office for a term of three years and
procedure whereby the Board of Directors may, when the
                                                                     may be re-elected; provided that the first Board of Directors
latter deems such action advisable, obtain a vote of the
                                                                     shall be elected by the Board of Governors at its inaugural
Governors on a specific question without calling a meeting of
                                                                     meeting, and shall hold office until the next immediately
the Board of Governors.
                                                                     following annual meeting of the Board of Governors or, if
                                                                     that Board shall so decide at that annual meeting, until its
4.     The Board of Governors, and the Board of Directors to         next subsequent annual meeting. They shall continue in
the extent authorized, may adopt such rules and regulations          office until their successors shall have been chosen and
and establish such subsidiary bodies as may be necessary or          assumed office. If the office of a Director becomes vacant
appropriate to conduct the business of the Bank.                     more than 180 days before the end of his or her term, a
                                                                     successor shall be chosen in accordance with Annex B, for
                                                                     the remainder of the term, by the Governors who elected the
                                                                     former Director. A majority of the votes cast by such
                          Article 26                                 Governors shall be required for such election. If the office of a
                                                                     Director becomes vacant 180 days or less before the end of
               Board of Directors: composition                       his or her term, a successor may similarly be chosen for the
                                                                     remainder of the term, by the votes cast by such Governors
                                                                     who elected the former Director, in which election a majority
1.     The Board of Directors shall be composed of 23                of the votes cast by such Governors shall be required. While
members who shall not be members of the Board of                     the office remains vacant, the Alternate of the former
Governors, and of whom:                                              Director shall exercise the powers of the latter, except that of
                                                                     appointing an Alternate.
 (i) 11 shall be elected by the Governors representing
      Belgium, Denmark, France, the Federal Republic of
      Germany, Greece, Ireland, Italy, Luxembourg, the
      Netherlands, Portugal, Spain, the United Kingdom, the                                     Article 27
      European Economic Community and the European
      Investment Bank; and                                                             Board of Directors: powers
(ii) 12 shall be elected by the Governors representing other
      members, of whom:                                              Without prejudice to the powers of the Board of Governors
      (a) four, by th e Governors representing those countries       as provided in Article 24 of this Agreement, the Board of
          listed in Annex A as Central and Eastern European          Directors shall be responsible for the direction of the general
          countries eligible for assistance from the Bank;           operations of the Bank and, for this purpose shall, in addition
                                                                     to the powers assigned to it expressly by this Agreement,
      (b) four, by the Governors representing those countries
                                                                     exercise all the powers delegated to it by the Board of
          listed in Annex A as other European countries;
                                                                     Governors, and in particular:
      (c) four, by the Governors representing those countries
          listed in Annex A as non-European countries.                 (i) prepare the work of the Board of Governors;
 ---pagebreak--- 26. 9. 90                                   Official Journal of the European Communities                                 No C 241/11
 (ii) in conformity with the general directions of the Board           Except as otherwise expressly provided in this Agreement,
      of Governors, establish policies and take decisions              and except for general policy decisions in which cases such
      concerning loans, guarantees, investments in equity              policy decisions shall be taken by a majority of not less than
      capital, borrowing by the Bank, the furnishing of                two-thirds of the total voting power of the members voting,
      technical assistance, and other operations of the                all matters before the Board of Directors shall be decided by a
      Bank;                                                            majority of the voting power of the members voting.
(iii) submit the audited accounts for each financial year for
      approval of the Board of Governors at each annual
      meeting; and                                                                                Article 30
(iv) approve the budget of the Bank.
                                                                                                The President
                                                                       1.     The Board of Governors, by a vote of a majority of the
                           Article 28                                  total number of Governors, representing not less than a
                                                                       majority of the total voting power of the members, shall elect
                Board of Directors: procedure                          a President of the Bank. The President, while holding office,
                                                                       shall not be a Governor or a Director or an Alternate for
1.     The Board of Directors shall normally function at the           either.
principal office of the Bank and shall meet as often as the
business of the Bank may require.                                      2.     The term of office of the President shall be four years.
                                                                       He or she may be re-elected. He or she shall, however, cease
2.     A majority of the Directors shall constitute a quorum           to hold office when the Board of Governors so decides by an
for any meeting of the Board of Directors, provided such               affirmative vote of not less than two-thirds of the Governors,
majority represents not less than two-thirds of the total              representing not less than two-thirds of the total voting
voting power of the members.                                           power of the members. If the office of the President for any
                                                                       reason becomes vacant, the Board of Governors, in
3.     The Board of Governors shall adopt regulations under            accordance with the provisions of paragraph 1 of this
which, if there is no Director of its nationality, a member may        Article, shall elect a successor for up to four years.
send a representative to attend, without right to vote, any
meeting of the Board of Directors when a matter particularly           3.     The President shall not vote, except that he or she may
affecting that member is under consideration.                          cast a deciding vote in case of an equal division. He or she
                                                                       may participate in meetings of the Board of Governors and
                                                                       shall chair the meetings of the Board of Directors.
                           Article 29                                  4.     The President shall be the legal representative of the
                                                                       Bank.
                             Voting
                                                                       5.     The President shall be chief of the staff of the Bank. He
                                                                       or she shall be responsible for the organization, appointment
1.     The voting power of each member shall be equal to the           and dismissal of the officers and staff in accordance with
number of its subscribed shares in the capital stock of the            regulations to be adopted by the Board of Directors. In
Bank. In the event of any member failing to pay any part of            appointing officers and staff, he or she shall, subject to the
the amount due in respect of its obligations in relation to            paramount importance of efficiency and technical
paid-in shares under Article 6 of this Agreement, such                 competence, pay due regard to recruitment on a wide
member shall be unable for so long as such failure continues           geographical basis among members of the Bank.
to exercise that percentage of its voting power which
corresponds to the percentage which the amount due but                 6.     The President shall conduct, under the direction of the
unpaid bears to the total amount of paid-in shares subscribed          Board of Directors, the current business of the Bank.
to by that member in the capital stock of the Bank.
2.     In voting in the Board of Governors, each Governor
shall be entitled to cast the votes of the member he or she                                       Article 31
represents. Except as otherwise expressly provided in this
Agreement, all matters before the Board of Governors shall                                     Vice President(s)
be decided by a majority of the voting power of the members
voting.
                                                                        1.    One or more Vice-Presidents shall be appointed by the
3.     In voting in the Board of Directors each Director shall         Board of Directors on the recommendation of the President.
be entitled to cast the number of votes to which the                   A Vice-President shall hold office for such term, exercise such
Governors who have elected him or her are entitled and those           authority and perform such functions in the administration
to which any Governors who have assigned their votes to him            of the Bank, as may be determined by the Board of Directors.
or her, pursuant to Section D of Annex B, are entitled. A              In the absence or incapacity of the President, a Vice-President
Director representing more than one member may cast                    shall exercise the authority and perform the functions of the
separately the votes of the members he or she represents.              President.
 ---pagebreak--- No C 241/12                                Official Journal of the European Communities                                     26. 9. 90
2.     A Vice-President may participate in meetings of the            members at intervals of three months or less a summary
Board of Directors but shall have no vote at such meetings,           statement of its financial position and a profit and loss
except that he or she may cast the deciding vote when acting          statement showing the results of its operations. The financial
in place of the President.                                            accounts shall be kept in ecus.
                                                                      2.     The Bank shall report annually on the environmental
                                                                      impact of its activities and may publish such other reports as
                           Article 32                                 it deems desirable to advance its purpose.
              International character of the Bank                     3.     Copies of all reports, statements and publications
                                                                      made under this Article shall be distributed to members.
1.     The Bank shall not accept Special Funds or other loans
or assistance that may in any way prejudice, deflect or
otherwise alter its purpose or functions.
                                                                                                 Article 36
2.     The Bank, its President, Vice-President(s), officers and
staff shall in their decisions take into account only                           Allocation and distribution of net income
considerations relevant to the Bank's purpose, functions and
operations, as set out in this Agreement. Such considerations
                                                                      1.     The Board of Governors shall determine at least
shall be weighed impartially in order to achieve and carry out
                                                                      annually what part of the Bank's net income, after making
the purpose and functions of the Bank.
                                                                      provision for reserves and, if necessary, against possible
3.     The President, Vice-President(s), officers and staff of        losses under paragraph 1 of Article 17 of this Agreement,
the Bank, in the discharge of their offices, shall owe their duty     shall be allocated to surplus or other purposes and what part,
                                                                      if any, shall be distributed. Any such decision on the
entirely to the Bank and to no other authority. Each member
                                                                      allocation of the Bank's net income to other purposes shall be
of the Bank shall respect the international character of this
                                                                      taken by a majority of not less than two-thirds of the
duty and shall refrain from all attempts to influence any of
                                                                      Governors, representing not less than two-thirds of the total
them in the discharge of their duties.
                                                                      voting power of the members. No such allocation, and no
                                                                      distribution, shall be made until the general reserve amounts
                                                                      to at least 10% of the authorized capital stock.
                           Article 33
                                                                      2.     Any distribution referred to in the preceding paragraph
                       Location of offices                            shall be made in proportion to the number of paid-in shares
                                                                      held by each member; provided that in calculating such
                                                                      number account shall be taken only of payments received in
1.     The principal office of the Bank shall be located in           cash and promissory notes encashed in respect of such shares
London.                                                               on or before the end of the relevant financial year.
2.     The Bank may establish agencies or branch offices in           3.     Payments to each member shall be made in such
the territory of any member of the Bank.                              manner as the Board of Governors shall determine. Such
                                                                      payments and their use by the receiving country shall be
                                                                      without restriction by any member.
                           Article 34
        Depositories and channels of communication
                                                                                                CHAPTER VII
1.     Each member shall designate its central bank, or such
other institution as may be agreed upon with the Bank, as a           WITHDRAWAL AND SUSPENSION OF MEMBERSHIP,
depository for all the Bank's holdings of its currency as well        TEMPORARY SUSPENSION AND TERMINATION OF
as other assets of the Bank.                                                                    OPERATIONS
2.     Each member shall designate an appropriate official
entity with which the Bank may communicate in connection
                                                                                                 Article 37
with any matter arising under this Agreement.
                                                                                      Right of members to withdraw
                           Article 35
                                                                      1.     Any member may withdraw from the Bank at any time
                                                                      by transmitting a notice in writing to the Bank at its principal
    Publication of reports and provision of information
                                                                      office.
1.     The Bank shall publish an annual report containing an          2.      Withdrawal by a member shall become effective, and
audited statement of its accounts and shall circulate to              its membership shall cease, on the date specified in its notice
 ---pagebreak--- 26. 9. 90                                  Official Journal of the European Communities                                No C 241/13
but in no event less than six months after such notice is                   Article 6 of this Agreement. In any event, no amount
received by the Bank. However, at any time before the                       due to a member for its shares shall be paid until six
withdrawal becomes finally effective, the member may notify                 months after the date upon which the member ceases to
the Bank in writing of the cancellation of its notice of                    be a member;
intention to withdraw.
                                                                       (ii) payments for shares may be made from time to time,
                                                                            upon their surrender by the former member, to the
                                                                            extent by which the amount due as the repurchase price
                                                                            in accordance with paragraph 2 of this Article exceeds
                           Article 38                                       the aggregate amount of liabilities on loans, equity
                                                                            investments and guarantees in subparagraph (i) of this
                   Suspension of membership                                 paragraph until the former member has received the full
                                                                            repurchase price;
1.      If a member fails to fulfil any of its obligations to the     (iii) payments shall be made on such conditions and in such
Bank, the Bank may suspend its membership by decision of a                  fully convertible currencies, or ecus, and on such dates,
majority of not less than two-thirds of the Governors,                      as the Bank determines; and
representing not less than two-thirds of the total voting
                                                                      (iv) if losses are sustained by the Bank on any guarantees,
power of the members. The member so suspended shall
                                                                            participations in loans, or loans which were
automatically cease to be a member one year from the date of
                                                                            outstanding on the date when the member ceased to be
its suspension unless a decision is taken by not less than the
                                                                            a member, or if a net loss is sustained by the Bank on
same majority to restore the member to good standing.
                                                                            equity investments held by it on such date, and the
                                                                            amount of such losses exceeds the amount of the
2.      While under suspension, a member shall not be entitled              reserves provided against losses on the date when the
to exercise any rights under this Agreement, except the right               member ceased to be a member, such former member
of withdrawal, but shall remain subject to all its                          shall repay, upon demand, the amount by which the
obligations.                                                                repurchase price of its shares would have been reduced
                                                                            if the losses had been taken into account when the
                                                                            repurchase price was determined. In addition, the
                                                                            former member shall remain liable on any call for
                           Article 39                                       unpaid subscriptions under Article 6 (4) of this
                                                                            Agreement, to the extent that it would have been
          Settlement of accounts with former members                        required to respond if the impairment of capital had
                                                                            occurred and the call had been made at the time the
                                                                            repurchase price of its shares was determined.
1.      After the date on which a member ceases to be a
member, such former member shall remain liable for its                4.     If the Bank terminates its operations pursuant to
direct obligations to the Bank and for its contingent liabilities     Article 41 of this Agreement within six months of the date
to the Bank so long as any part of the loans, equity                  upon which any member ceases to be a member, all rights of
investments or guarantees contracted before it ceased to be a         such former member shall be determined in accordance with
member are outstanding; but it shall cease to incur such              the provisions of Articles 41 to 43 of this Agreement.
liabilities with respect to loans, equity investments and
guarantees entered into thereafter by the Bank and to share
either in the income or the expenses of the Bank.
                                                                                                 Article 40
2.      At the time a member ceases to be a member, the Bank                       Temporary suspension of operations
shall arrange for the repurchase of such former member's
shares as a part of the settlement of accounts with such
                                                                      In an emergency, the Board of Directors may suspend
former member in accordance with the provisions of this
                                                                      temporarily operations in respect of new loans, guarantees,
Article. For this purpose, the repurchase price of the shares
                                                                      underwriting, technical assistance and equity investments
shall be the value shown by the books of the Bank on the date
                                                                      pending an opportunity for further consideration and action
of cessation of membership, with the original purchase price
                                                                      by the Board of Governors.
of each share being its maximum value.
3.      The payment for shares repurchased by the Bank under
this Article shall be governed by the following conditions:                                      Article 41
  (i) any amount due to the former member for its shares                                Termination of operations
       shall be withheld so long as the former member, its
       central bank or any of its agencies or instrumentalities       The Bank may terminate its operations by the affirmative
       remains liable, as borrower or guarantor, to the Bank          vote of not less than two-thirds of the Governors,
       and such amount may, at the option of the Bank, be             representing not less than three-fourths of the total voting
       applied on any such liability as it matures. No amount         power of the members. Upon such termination of operations
       shall be withheld on account of the liability of the           the Bank shall forthwith cease all activities, except those
       former member resulting from its subscription for              incident to the orderly realization, conservation and
       shares in accordance with paragraphs 4, 5 and 7 of             preservation of its assets and settlement of its obligations.
 ---pagebreak--- No C 241/14                                Official Journal of the European Communities                                   26. 9. 90
                            Article 42                                and exemptions set forth in this Chapter shall be accorded to
                                                                      the Bank in the territory of each member country.
        Liability of members and payment of claims
1.     In the event of termination of the operations of the                                      Article 45
Bank, the liability of all members for uncalled subscriptions
to the capital stock of the Bank shall continue until all claims                             Status of the Bank
of creditors, including all contingent claims, shall have been
discharged.
                                                                      The Bank shall possess full legal personality and, in
2.     Creditors on ordinary operations holding direct claims         particular, the full legal capacity:
shall be paid first out of the assets of the Bank, secondly out
of the payments to be made to the Bank in respect of unpaid             (i) to contract;
paid-in shares, and then out of payments to be made to the             (ii) to acquire, and dispose of, immovable and movable
Bank in respect of callable capital stock. Before making any                 property; and
payments to creditors holding direct claims, the Board of
Directors shall make such arrangements as are necessary, in           (iii) to institute legal proceedings.
its judgment, to ensure a pro rata distribution among holders
of direct and holders of contingent claims.
                                                                                                 Article 46
                            Article 43                                     Position of the Bank with regard to judicial process
                     Distribution of assets
                                                                      Actions may be brought against the Bank only in a court of
                                                                      competent jurisdiction in the territory of a country in which
1.     No distribution under this Chapter shall be made to            the Bank has an office, has appointed an agent for the
members on account of their subscriptions to the capital              purpose of accepting service or notice of process, or has
stock of the Bank until:                                              issued or guaranteed securities. No actions shall, however,
                                                                      be brought by members or persons acting for or deriving
 (i) all liabilities to creditors have been discharged or
                                                                      claims from members. The property and assets of the Bank
      provided for; and
                                                                      shall, wheresoever located and by whomsoever held, be
(ii) the Board of Governors has decided by a vote of not less         immune from all forms of seizure, attachment or execution
      than two-thirds of the Governors, representing not less         before the delivery of final judgment against the Bank.
      than three-fourths of the total voting power of the
      members, to make a distribution.
2.     Any distribution of the assets of the Bank to the                                         Article 47
members shall be in proportion to the capital stock held by
each member and shall be effected at such times and under                            Immunity of assets from seizure
such conditions as the Bank shall deem fair and equitable.
The shares of assets distributed need not be uniform as to
                                                                      Property and assets of the Bank, wheresoever located and by
type of assets. No member shall be entitled to receive its share
                                                                      whomsoever held, shall be immune from search, requisition,
in such a distribution of assets until it has settled all of its
                                                                      confiscation, expropriation or any other form of taking or
obligations to the Bank.
                                                                      foreclosure by executive or legislative action.
3.     Any member receiving assets distributed pursuant to
this Article shall enjoy the same rights with respect to such
assets as the Bank enjoyed prior to their distribution.                                          Article 48
                                                                                           Immunity of archives
                         CHAPTER VIII                                 The archives of the Bank, and in general all documents
                                                                      belonging to it or held by it, shall be inviolable.
  STATUS, IMMUNITIES, PRIVILEGES AND EXEMPTIONS
                            Article 44                                                           Article 49
                     Purposes of Chapter                                            Freedom of assets from restrictions
To enable the Bank to fulfil its purpose and the functions            To the extent necessary to carry out the purpose and
with which it is entrusted, the status, immunities, privileges        functions of the Bank and subject to the provisions of this
 ---pagebreak--- 26. 9. 90                                  Official Journal of the European Communities                                  No C 241/15
Agreement, all property and assets of the Bank shall be free          shall negotiate specific agreements implementing the
from restrictions, regulations, controls and moratoria of any         provisions of this paragraph with the country in which the
nature.                                                               principal office of the Bank is located and, as appropriate,
                                                                      with the other countries concerned.
                             Article 50
                  Privilege for communications                                                    Article 53
The official communications of the Bank shall be accorded                                Exemption from taxation
by each member the same treatment that it accords to the
official communications of any other member.
                                                                      1.     Within the scope of its official activities the Bank, its
                                                                      assets, property, and income shall be exempt from all direct
                             Article 51                               taxes.
             Immunities of officers and employees                     2.     When purchases or services of substantial value and
                                                                      necessary for the exercise of the official activities of the Bank
All Governors, Directors, Alternates, officers and employees          are made or used by the Bank and when the price of such
of the Bank and experts performing missions for the Bank              purchases or services includes taxes or duties, the member
shall be immune from legal process with respect to acts               that has levied the taxes or duties shall, if they are
performed by them in their official capacity, except when the         identifiable, take appropriate measures to grant exemption
Bank waives this immunity, and shall enjoy inviolability of           from such taxes or duties or to provide for their
all their official papers and documents. This immunity shall          reimbursement.
not apply, however, to civil liability in the case of damage
arising from a road traffic accident caused by any such               3.     Goods imported by the Bank and necessary for the
Governor, Director, Alternate, officer, employee or                   exercise of its official activities shall be exempt from all
expert.                                                               import duties and taxes, and from all import prohibitions
                                                                      and restrictions. Similarly goods exported by the Bank and
                                                                      necessary for the exercise of its official activities shall be
                                                                      exempt from all export duties and taxes, and from all export
                            Article 52                                prohibitions and restrictions.
              Privileges of officers and employees
                                                                      4.     Goods acquired or imported and exempted under this
                                                                      Article shall not be sold, hired out, lent or given away against
1.      All Governors, Directors, Alternates, officers and            payment or free charge, except in accordance with conditions
employees of the Bank and experts of the Bank performing              laid down by the members which have granted exemptions or
missions for the Bank:                                                reimbursements.
 (i) not being local nationals, shall be accorded the same
      immunities from immigration restrictions, alien                 5.     The provisions of this Article shall not apply to taxes or
      registration requirements and national service                  duties which are no more than charges for public utility
      obligations, and the same facilities as regards exchange        services.
      regulations, as are accorded by members to the
      representatives, officials, and employees of comparable         6.     Directors, Alternate Directors, officers and employees
      rank of other members; and                                      of the Bank shall be subject to an internal effective tax for the
                                                                      benefit of the Bank on salaries and emoluments paid by the
(ii) shall be granted the same treatment in respect of
                                                                      Bank, subject to conditions to be laid down and rules to be
      travelling facilities as is accorded by members to
                                                                      adopted by the Board of Governors within a period of one
      representatives, officials and employees of comparable
                                                                      year from the date of entry into force of this Agreement.
      rank of other members.
                                                                      From the date on which this tax is applied, such salaries and
                                                                      emoluments shall be exempt from national income tax. The
2.      The spouses and immediate dependants oi those
                                                                      members may, however, take into account the salaries and
Directors, Alternate Directors, officers, employees and
                                                                      emoluments thus exempt when assessing the amount of tax
experts of the Bank who are resident in the country in which
the principal office of the Bank is located shall be accorded         to be applied to income from other sources.
opportunity to take employment in that country. The
spouses and immediate dependants of those Directors,                  7.     Notwithstanding the provisions of paragraph 6 of this
Alternate Directors, officers, employees and experts of the           Article, a member may deposit, with its instrument of
Bank who are resident in a country in which any agency or             ratification, acceptance or approval, a declaration that such
branch office of the Bank is located should, wherever                 member retains for itself, its political subdivisions or its local
possible, in accordance with the national law of that country,        authorities the right to tax salaries and emoluments paid by
be accorded similar opportunity in that country. The Bank             the Bank to citizens or nationals of such member. The Bank
 ---pagebreak--- No C 241/16                                Official Journal of the European Communities                                     26. 9. 90
shall be exempt from any obligation for the payment,                                            CHAPTER IX
withholding or collection of such taxes. The Bank shall hot
make any reimbursement for such taxes.                                    AMENDMENTS, INTERPRETATION, ARBITRATION
 8.    Paragraph 6 of this Article shall not apply to pensions
 and annuities paid by the Bank.
                                                                                                  Article 56
 9.    No tax of any kind shall be levied on any obligation or
                                                                                                Amendments
security issued by the Bank, including any dividend or
interest thereon, by whomsoever held:
  (i) which discriminates against such obligation or security         1.      Any proposal to amend this Agreement, whether
      solely because it is issued by the Bank, or                     emanating from a member, a Governor or the Board of
                                                                      Directors, shall be communicated to the Chairman of the
(ii) if the sole jurisdictional basis for such taxation is the        Board of Governors who shall bring the proposal before that
      place or currency in which it is issued, made payable or        Board. If the proposed amendment is approved by the Board
      paid, or the location of any office or place of business        the Bank shall, by any rapid means of communication, ask all
      maintained by the Bank.                                         members whether they accept the proposed amendment.
                                                                      When not less than three-fourths of the members (including
 10.     No tax of any kind shall be levied on any obligation or      at least two countries from Central and Eastern Europe listed
security guaranteed by the Bank, including any dividend or            in Annex A), having not less than four-fifths of the total
interest thereon, by whomsoever held:                                 voting power of the members, have accepted the proposed
                                                                      amendment, the Bank shall certify that fact by formal
 (i) which discriminates against such obligation or security          communication addressed to all members.
      solely because it is guaranteed by the Bank; or
(ii) if the sole jurisdictional basis for such taxation is the        2.     Notwithstanding paragraph 1 of this Article:
      location of any office or place of business maintained by
                                                                       (i) acceptance by all members shall be required in the case
      the Bank.
                                                                            of any amendment modifying:
                                                                            (a) the right to withdraw from the Bank;
                                                                            (b) the rights pertaining to purchase of capital stock
                            Article 54                                           provided for in Article 5 (3) of this Agreement;
                                                                            (c) the limitations on liability provided for in Article 5
                  Implementation of Chapter                                      (7) of this Agreement; and
                                                                            (d) the purpose and functions of the Bank defined by
Each member shall promptly take such action as is necessary                      Articles 1 and 2 of this Agreement;
for the purpose of implementing the provisions of this
Chapter and shall inform the Bank of the detailed action              (ii) acceptance by not less than three-fourths of the
which it has taken.                                                         members having not less than 85 % of the total voting
                                                                            power of the members shall be required in the case of
                                                                            any amendment modifying Article 8 (4) of this
                                                                            Agreement.
                            Article 55                                When the requirements for accepting any such proposed
                                                                      amendment have been met, the Bank shall certify that fact by°
      Waiver of immunities, privileges and exemptions                 formal communication addressed to all members.
                                                                      3.     Amendments shall enter into force for all members
The immunities, privileges and exemptions conferred under
                                                                      three months after the date of the formal communication
this Chapter are granted in the interest of the Bank. The
                                                                      provided for in paragraphs 1 and 2 of this Article unless the
Board of Directors may waive to such extent and upon such
                                                                      Board of Governors specifies a different period.
conditions as it may determine any of the immunities,
privileges and exemptions conferred under this Chapter in
cases where such action would, in its opinion, be appropriate
in the best interests of the Bank. The President shall have the
right and the duty to waive any immunity, privilege or                                            Article 57
exemption in respect of any officer, employee or expert of the
Bank, other than the President or a Vice-President, where, in                          Interpretation and application
his or her opinion, the immunity, privilege or exemption
would impede the course of justice and can be waived
without prejudice to the interests of the Bank. In similar            1.     Any question of interpretation or application of the
circumstances and under the same conditions, the Board of             provisions of this Agreement arising between any member
Directors shall have the right and the duty to waive any              and the Bank, or between any members of the Bank, shall be
immunity, privilege or exemption in respect of the President          submitted to the Board of Directors for its decision. If there is
and each Vice-President.                                              no Director of its nationality in that Board, a member
 ---pagebreak--- 26. 9. 90                                   Official Journal of the European Communities                                  No C 241/17
 particularly affected by the question under consideration             prospective members whose names are set forth in Annex A
 shall be entitled to direct representation in the meeting of the      to this Agreement.
 Board of Directors during such consideration. The
 representative of such member shall, however, have no vote.           2.     The Depository shall communicate certified copies of
 Such right of representation shall be regulated by the Board          this Agreement to all the Signatories.
 of Governors.
 2.     In any case where the Board of Directors has given a
 decision under paragraph 1 of this Article, any member may                                       Article 61
 require that the question be referred to the Board of
 Governors, whose decision shall be final. Pending the                              Ratification, acceptance or approval
 decision of the Board of Governors, the Bank may, so far as it
 deems it necessary, act on the basis of the decision of the
                                                                        1.    The Agreement shall be subject to ratification,
 Board of Directors.
                                                                       acceptance or approval by the Signatories. Instruments of
                                                                       ratification, acceptance or approval shall, subject to
                                                                       paragraph 2 of this Article, be deposited with the Depository
                             Article 58                                not later than 31 March 1991. The Depository shall duly
                                                                       notify the other Signatories of each deposit and the date
                            Arbitration                                thereof.
If a disagreement should arise between the Bank and a                  2.     Any Signatory may become a party to this Agreement
member which has ceased to be a member, or between the                 by depositing an instrument of ratification, acceptance or
Bank and any member after adoption of a decision to                    approval until one year after the date of its entry into force or,
terminate the operations of the Bank, such disagreement                if necessary, until such later date as may be decided by a
shall be submitted to arbitration by a tribunal of three               majority of Governors, representing a majority of the total
arbitrators, one appointed by the Bank, another by the                 voting power of the members.
member or former member concerned, and the third, unless
the parties otherwise agree, by the President of the                   3.     A Signatory whose instrument referred to in
International Court of Justice or such other authority as may          paragraph 1 of this Article is deposited before the date on
have been prescribed by regulations adopted by the Board of            which this Agreement enters into force shall become a
Governors. A majority vote of the arbitrators shall be                 member of the Bank on that date. Any other Signatory which
sufficient to reach a decision which shall be final and binding        complies with the provisions of the preceding paragraph sh all
upon the parties. The third arbitrator shall have full power to        become a member of the Bank on the date on which its
settle all questions of procedure in any case where the parties        instrument of ratification, acceptance or approval is
are in disagreement with respect thereto.                              deposited.
                             Article 59                                                           Article 62
                     Approval deemed given                                                     Entry into force
Whenever the approval or the acceptance of any member is               1.     This Agreement shall enter into force when
required before any act may be done by the Bank, except                instruments of ratification, acceptance or approval have been
under Article 56 of this Agreement, approval or acceptance             deposited by Signatories whose initial subscriptions
shall be deemed to have been given unless the member                   represent not less than two thirds of the total subscriptions
presents an objection within such reasonable period as the             set forth in Annex A, including at least two countries from
Bank may fix in notifying the member of the proposed                   Central and Eastern Europe listed in Annex A.
act.
                                                                       2.     If this Agreement has not entered into force by 31
                                                                       March 1991, the Depository may convene a conference of
                                                                       interested prospective members to determine the future
                                                                       course of action and decide a new date by which instruments
                           CHAPTER X
                                                                       of ratification, acceptance or approval shall be deposited.
                       FINAL PROVISIONS
                             Article 60                                                           Article 63
                      Signature and deposit                                Inaugural meeting and commencement of operations
1.     This Agreement deposited with the Government of the             1.     As soon as this Agreement enters into force under
French Republic (hereinafter called 'the Depository'), shall           Article 62 of this Agreement, each member shall appoint a
remain open until 31 December 1990 for signature by the                Governor. The Depository shall call the first meeting of the
 ---pagebreak--- No C 241/18                               Official Journal of the European Communities                                    26. 9. 90
Board of Governors within 60 days of entry into force of               (iii) shall make arrangements for determining the date of the
this Agreement under Article 62 or as soon as possible                       commencement of the Bank's operations; and
thereafter.
                                                                       (iv) shall make such other arrangements as appear to it
2.     At its first meeting, the Board of Governors:                         necessary to prepare for the commencement of the
                                                                             Bank's operations.
  (i) shall elect the President;
 (ii) shall elect the Directors of the Bank in accordance with         3.     The Bank shall notify its members of the date of
      Article 26 of this Agreement;                                    commencement of its operations.
               Done at Paris on 29 May 1990 in a single original, whose English, French, German and Russian texts
               are equally authentic, which shall be deposited in the archives of the Depository which shall transmit a
               duly certified copy to each of the other prospective members whose names are set forth in
               Annex A.
 ---pagebreak--- 26. 9. 90                                   Official Journal of the European Communities                                              No C 241/19
                                                                   ANNEX A
          Initial subscriptions to the authorized capital stock for prospective members (*) which may become members in
                                                          accordance with Article 61
                                                                                               Number of               Capital
                                                                                                  shares             subscription
                                                                                                                    (ECU million)
          A. EUROPEAN COMMUNITIES
               a) Belgium                                                                         22  800               228,00
                    Denmark                                                                       12  000               120,00
                    France                                                                        85  175               851,75
                    Germany, Federal Republic of                                                  85  175               851,75
                    Greece                                                                          6 500                 65,00
                    Ireland                                                                         3 000                 30,00
                    Italy                                                                         85  175               851,75
                    Luxembourg                                                                      2 000                 20,00
                    Netherlands                                                                   24  800               248,00
                    Portugal                                                                        4 200                 42,00
                    Spain                                                                         34  000               340,00
                    United Kingdom                                                                85  175               851,75
               b) European Economic Community                                                     30 000                300,00
                    European Investment Bank                                                      30 000                300,00
          B. OTHER EUROPEAN COUNTRIES
               Austria                                                                            22  800               228,00
               Cyprus                                                                               1 000                 10,00
               Finland                                                                            12  500               125,00
               Iceland                                                                              1 000                 10,00
               Israel                                                                               6 500                 65,00
               Liechtenstein                                                                          200                  2,00
               Malta                                                                                  100                  1,00
               Norway                                                                             12  500               125,00
               Sweden                                                                             22  800               228,00
               Switzerland                                                                        22  800               228,00
               Turkey                                                                              11 500               115,00
          C. RECIPIENT COUNTRIES
               Bulgaria                                                                             7 900                 79,00
               Czechoslovakia                                                                     12  800               128,00
               German Democratic Republic                                                          15 500               155,00
               Hungary                                                                              7 900                 79,00
               Poland                                                                             12  800               128,00
               Romania                                                                              4 800                 48,00
               Union of Soviet Socialist Republics                                                60  000               600,00
               Yugoslavia                                                                         12  800               128,00
          D. NON-EUROPEAN COUNTRIES
               Australia                                                                          10 000                100,00
               Canada                                                                             34 000                340,00
               Egypt                                                                                1000                  10,00
               Japan                                                                              85 175                851,75
               Korea, Republic of                                                                   6 500                 65,00
               Mexico                                                                               3 000                 30,00
               Morocco                                                                              1 000                 10,00
               New Zealand                                                                          1 000                 10,00
               United States of America                                                          100 000              1 000,00
          E. NON-ALLOCATED SHARES                                                                     125                  1,25
                                                                             TOTAL            1 000 000              10 000,00
          (') Prospective members are listed under the above categories only for the purpose of this Agreement. Recipient countries are
              referred to elsewhere in this Agreement as Central and Eastern European countries.
 ---pagebreak--- No C 241/20                                     Official Journal of the European Communities                                              26. 9. 90
                                                                      ANNEX B
                 Section A — Election of Directors by Governors representing Belgium, Denmark, France, the Federal Republic of
                 Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, the
                 European Economie Community and the European Investment Bank (hereinafter referred to as Section A
                                                                     Governors)
 1.    The provisions set out below in this Section shall apply              person, then the votes of the Governor casting the next largest
exclusively to this Section.                                                 number and so on, until 5,5% is reached.
2.     Candidates for the office of Director shall be nominated by           7.     Any Governor, part of whose votes must be counted in order
Section A Governors, provided that a Governor may nominate only              to raise the total of votes cast for any person above 4,5 % shall be
one person. The election of Directors shall be by ballot of Section A        considered as casting all of his or her votes for such person, even if
Governors.                                                                   the total votes for such person thereby exceed 5,5 % and shall not be
                                                                             eligible to vote in a further ballot.
3.     Each Governor eligible to vote shall cast for one person all of
the votes to which the member appointing him or her is entitled              8.     Subject to paragraph 10 of this Section, if, after the second
under Article 29 (1) and (2) of this Agreement.                              ballot, 11 persons have not been elected, further ballots shall be held
                                                                             in conformity with the principles and procedures laid down in this
4.     Subject to paragraph 10 of this Section, the 11 persons               Section, until 11 persons have been elected, provided that, if at any
receiving the highest number of votes shall be Directors, except that        stage 10 persons are elected, notwithstanding the provisions of
no person who receives less than 4,5 % of the total of the votes which       paragraph 4 of this Section, the 11th may be elected by a simple
can be cast (eligible votes) in Section A shall be considered                majority of the remaining votes cast.
elected.
                                                                             9.     In the case of an increase or decrease in the number of
5.     Subject to paragraph 10 of this Section, if 11 persons are not        Directors to be elected by Section A Governors, the minimum and
elected on the first ballot, a second ballot shall be held in which,         maximum percentages specified in paragraphs 4 , 5 , 6 and 7 of this
unless there were no more than 11 candidates, the person who                 Section shall be appropriately adjusted by the Board of
received the lowest number of votes in the first ballot shall be             Governors.
ineligible for election and in which there shall vote only:
                                                                             10.     So long as any Signatory, or group of Signatories, whose
(a) those Governors who voted in the first ballot for a person not           share of the total amount of capital subscriptions provided in
     elected, and                                                            Annex A is more than 2 , 4 % , has not deposited its instrument or
                                                                             their instruments of ratification, approval or acceptance, there shall
(b) those Governors whose votes for a person elected are deemed              be no election for one Director in respect of each such Signatory or
     under paragraphs 6 and 7 below of this Section to have raised           group of Signatories. The Governor or Governors representing such
     the votes cast for that person above 5,5% of the eligible               a Signatory or group of Signatories shall elect a Director in respect of
     votes.                                                                  each Signatory or group of Signatories, immediately after the
                                                                             Signatory becomes a member or the group of Signatories become
6.     In determining whether the votes cast by a Governor are               members. Such Director shall be deemed to have been elected by the
deemed to have raised the total votes cast for any person above 5,5 %        Board of Governors at its inaugural meeting, in accordance with
of the eligible votes, the 5,5 % shall be deemed to include, first, the      Article 26 (3) of this Agreement, if he or she is elected during the
votes of the Governor casting the largest number of votes for such           period in which the first Board of Directors shall hold office.
                                  Section B — Election of Directors by Governors representing other countries
                 Section B (i) — Election of Directors by Governors representing those countries listed in Annex A as Central and
                                 Eastern European Countries (recipient countries) (hereinafter referred to as Section B (i)
                                 Governors)
1.'    The provisions set out below in this Section shall apply              no person who receives less than 12 % of the total of the votes which
exclusively to this Section.                                                 can be cast (eligible votes) in Section B (i) shall be considered
                                                                             elected.
2.     Candidates for the office of Director shall be nominated by
Section B (i) Governors, provided that a Governor may nominate               5.     Subject to paragraph lOof this Section, if four persons are not
only one person. The election of Directors shall be by ballot of             elected on the first ballot, a second ballot shall be held in which,
Section B (i) Governors.                                                     unless there were no more than four candidates, the person who
                                                                             received the lowest number of votes in the first ballot shall be
3.     Each Governor eligible to vote shall cast for one person all of       ineligible for election and in which there shall vote only:
the votes to which the member appointing him or her is entitled              (a) those Governors who voted in the first ballot for a person not
under Article 29 (1) and (2) of this Agreement.                                   elected, and
4.     Subject to paragraph 10 of this Section, the four persons             (b) those Governors whose votes for a person elected are deemed
receiving the highest number of votes shall be Directors, except that             under paragraphs 6 and 7 below of this Section to have raised
 ---pagebreak--- 2 6 . 9. 9 0                                    Official Journal of the E u r o p e a n Communities                                  No C 241/21
      the votes cast for that person above 1 3 % of the eligible              this Section, until four persons have been elected, provided that, if at
      votes.                                                                  any stage three persons are elected, notwithstanding the provisions
                                                                              of paragraph 4 of this Section, the fourth may be elected by a simple
                                                                              majority of the remaining votes cast.
6.      In determining whether the votes cast by a Governor are               9.       In the case of an increase or decrease in the number of
deemed to have raised the total votes cast for any person above 13 %          Directors to be elected by Section B (i) Governors, the minimum and
of the eligible votes, the 13 % shall be deemed to include, first, the        maximum percentages specified in paragraphs 4, 5, 6 and 7 of this
votes of the Governor casting the largest number of votes for such            Section shall be appropriately adjusted by the Board of
person, then the votes of the Governor casting the next largest               Governors.
number and so on, until 1 3 % is reached.
                                                                              10.       So long as any Signatory, or group of Signatories, whose
                                                                              share of the total amount of capital subscriptions provided in
                                                                              Annex A is more than 2,8 % has not deposited its instrument or their
7.      Any Governor, part of whose votes must be counted in order
                                                                              instruments of ratification, approval or acceptance, there shall be no
to raise the total of votes cast for any person above 1 2 % shall be
                                                                              election for one Director in respect of each such a Signatory or group
considered as casting all of his or her votes for such person, even if
                                                                              of Signatories. The Governor or Governors representing such a
the total votes for such person thereby exceed 13 % and shall not be
                                                                              Signatory or group of Signatories shall elect a Director in respect of
eligible to vote in a further ballot.
                                                                              each Signatory or group of Signatories, immediately after the
                                                                              Signatory becomes a member or the group of Signatories become
                                                                              members. Such Director shall be deemed to have been elected by the
8.      Subject to paragraph 10 of this Section, if, after the second         Board of Governors at its inaugural meeting, in accordance with
ballot, four persons have not been elected, further ballots shall be          Article 26 (3) of this Agreement, if he or she is elected during the
held in conformity with the principles and procedures laid down in            period in which the first Board of Directors shall hold office.
                 Section B (ii) — Election of Directors by Governors representing those countries listed in Annex A as other
                                  European countries (hereinafter referred to as Section B (ii) Governors)
1.      The provisions set out below in this Section shall apply             first, the votes of the Governor casting the largest number of votes
exclusively to this Section.                                                 for such person, then the votes of the Governor casting the next
                                                                             largest number and so on, until 2 1 , 5 % is reached.
2.      Candidates for the office of Director shall be nominated by
Section B (ii) Governors provided that a Governor may nominate               7.       Any Governor, part of whose votes must be counted in order
only one person. The election of Directors shall be by ballot of             to raise the total of votes cast for any person above 20,5 % shall be
Section B (ii) Governors.                                                    considered as casting all of his or her votes for such person, even if
                                                                             the total votes for such person thereby exceed 21,5 % and shall not
                                                                             be eligible to vote in a further ballot.
3.     Each Governor eligible to vote shall cast for one person all of
the votes to which the member appointing him or her is entitled
                                                                              8.      Subject to paragraph 10 of this Section, if, after the second
under Article 29 (1) and (2) of this Agreement.
                                                                              ballot, four persons have not been elected, further ballots shall be
                                                                             held in conformity with the principles and procedures laid down in
                                                                             this Section, until four persons have been elected, provided that, if at
4.     Subject to paragraph 10 of this Section, the four persons             any stage three persons are elected, notwithstanding the provisions
receiving the highest number of votes shall be Directors, except that        of paragraph 4 of this Section, the fourth may be elected by a simple
no person who receives less than 20,5 % of the votes which can be            majority of the remaining votes cast.
cast (eligible votes) in Section B (ii) shall be considered elected.
                                                                              9.      In the case of an increase or decrease in the number of
5.     Subject to paragraph 10 of this Section, if four persons are not      Directors to be elected by Section B (ii) Governors, the minimum and
elected on the first ballot, a second ballot shall be held in which,         maximum percentages specified in paragraphs 4, 5, 6 and 7 of this
unless there were no more than four candidates, the person who               Section shall be appropriately adjusted by the Board of
received the lowest number of votes in the first ballot shall be             Governors.
ineligible for election and in which there shall vote only:
                                                                              10.       So long as any Signatory, or group of Signatories, whose
(a) those Governors who voted in the first ballot for a person not
                                                                             share of the total amount of capital subscriptions provided in
      elected, and
                                                                             Annex A is more than 2,8 %, has not deposited its instrument or
                                                                             their instruments of ratification, approval or acceptance, there shall
(b) those Governors whose votes for a person elected are deemed               be no election for one Director in respect of each such Signatory or
      under paragraphs 6 and 7 below of this Section to have raised          group of Signatories. The Governor or Governors representing such
      the votes cast for that person above 2 1 , 5 % of the eligible          a Signatory or group of Signatories shall elect a Director in respect of
      votes.                                                                 each Signatory or group of Signatories, immediately after the
                                                                              Signatory becomes a member or the group of Signatories become
                                                                              members. Such Director shall be deemed to have been elected by the
6.     In determining whether the votes cast by a Governor are               Board of Governors at its inaugural meeting, in accordance with
deemed to have raised the total votes cast for any person above              Article 26 (3) of this Agreement, if he or she is elected during the
21,5 % of the eligible votes, the 21,5 % shall be deemed to include,         period in which the first Board of Directors shall hold office.
 ---pagebreak--- No C 241/22                                    Official Journal of the European Communities                                           26. 9. 90
                 Section B (iii) — Election of Directors by Governors representing those countries listed in Annex A as
                                   Non-European Countries (hereinafter referred to as Section B (Hi) Governors)
 1.     The provisions set out below in this Section shall apply          this Section, until four persons have been elected, provided that, if at
exclusively to this Section.                                               any stage three persons are elected, notwithstanding the provisions
                                                                           of paragraph 4 of this Section, the fourth may be elected by a simple
                                                                           majority of the remaining votes cast.
2.      Candidates for the office of Director shall be nominated by
Section B (iii) Governors, provided that a Governor may nominate           9.    In the case of an increase or decrease in the number of
only one person. The election of Directors shall be by ballot of           Directors to be elected by Section B (iii) Governors, the minimum
 Section B (iii) Governors.                                                and maximum percentages specified in paragraphs 4, 5, 6 and 7 of
                                                                           this Section shall be appropriately adjusted by the Board of
                                                                           Governors.
3.      Each Governor eligible to vote shall cast for one person all of
the votes to which the member appointing him or her is entitled            10.    So long as any Signatory, or group of Signatories, whose
under Article 29 (1) and (2) of this Agreement.                            share of the total amount of capital subscriptions provided in
                                                                          Annex A is more than 5 %, has not deposited its instrument or their
                                                                           instruments of ratification, approval or acceptance, there shall be no
4.      Subject to paragraph 10 of this Section, the four persons         election for one Director in respect of each such Signatory or group
receiving the highest number of votes shall be Directors, except that     of Signatories. The Governor or Governors representing such a
no person who receives less than 8 % of the total of the votes which       Signatory or group of Signatories shall elect a Director in respect of
can be cast (eligible votes) in Section B (iii) shall be considered       each Signatory or group of Signatories, immediately after the
elected.                                                                   Signatory becomes a member or the group of Signatories become
                                                                          members. Such Director shall be deemed to have been elected by the
                                                                          Board of Governors at its inaugural meeting, in accordance with
5.      Subject to paragraph 10 of this Section, if four persons are not  Article 26 (3) of this Agreement, if he or she is elected during the
elected on the first ballot, a second ballot shall be held in which,      period in which the first Board of Directors shall hold office.
unless there were no more than four candidates, the person who
received the lowest number of votes in the first ballot shall be
ineligible for election and in which there shall vote only:
                                                                          Section C: Arrangements for the election of Directors representing
                                                                                              countries not listed in Annex A
(a) those Governors who voted in the first ballot for a person not
      elected, and
                                                                          If the Board of Governors decides, in accordance with Article 26 (3)
(b) those Governors whose votes for a person elected are deemed           of this Agreement, to increase or decrease the size, or revise the
      under paragraphs 6 and 7 below of this Section to have raised       composition, of the Board of Directors, in order to take into account
      the votes cast for that person above 9 % of the eligible votes. t   changes in the number of members of the Bank, the Board of
                                                                          Governors shall first consider whether any amendments are required
                                                                          to this Annex, and may make any such amendments as it deems
6.      In determining whether the votes cast by a Governor are           necessary as part of such decision.
deemed to have raised the total votes cast for any person above 9 %
of the eligible votes, the 9 % shall be deemed to include, first, the
votes of the Governor casting the largest number of votes for such                            Section D: Assignment of votes
person, then the votes of the Governor casting the next largest
number and so on, until 9 % is reached.
                                                                          Any Governor who does not participate in voting for the election or
                                                                          whose vote does not contribute to the election of a Director under
7.     Any Governor, part of whose votes must be counted in order         Section A or Section B (i) or Section B (ii) or Section B (iii) of this
to raise the total of votes cast for any person above 8 % shall be        Annex may assign the votes to which he or she is entitled to an elected
considered as casting all of his or her votes for such person, even if    Director, provided that such Governor shall first have obtained the
the total votes for such person thereby exceed 9 % and shall not be       agreement of all those Governors who have elected that Director to
eligible to vote in a further ballot.                                     such assignment.
                                                                          A decision by any Governor not to participate in voting for the
8.     Subject to paragraph 10 of this Section, if, after the second      election of a Director shall not affect the calculation of the eligible
ballot, four persons have not been elected, further ballots shall be      votes to be made under Section A, Section B (i), Section B (ii) or
held in conformity with the principles and procedures laid down in        Section B (iii) of this Annex.