ASIAN DEVELOPME

AGREEMENT ESTABLISHING

THE ASIAN DEVELOPMENT BANK

Certified True Coby . eا
ASIAN DEVELOPMENT BANK

Manila, Philippines 1968
NOTES

(i) As provided in Article 65, this Agreement came into force on 22 August 1966.

(i) In accordance with Article 66, the Inaugural Meeting was held at Tokyo from 24 to 26 November 1966 and pursuant to Resolution No. 9 of the Board of Governors, the Bank commenced operations on 19 December 1966.

(il) Certain printing errors in the original text deposited with the Secretary- General of the United Nations have been formally corrected. These corrections have been incorporated in the present publication. A Proces-Verbal of Recti- fication was issued by the Secretary-General on 17 November 1967.

(iv) At its Inaugural Meeting the Board of Governors adopted resolutions admitting new members and providing for increases in subscriptions of certain members and an increase to $1,100 million in the authorized capital stock of the Bank. The members of the Bank and their subscriptions to the Authorized

Capital Stock, as at 31st December 1967, are listed in the footnote to Annex A on pages 36 to 37.
TABLE OF CONTENTS

Chapter

Page

I. PURPOSE, FUNCTIONS AND MEMBERSHIP

2

II. CAPITAL

III. OPERATIONS

7

IV. BORROWING AND OTHER MISCELLANEOUS POWERS

14

V. CURRENCIES

16

VI. ORGANIZATION AND MANAGEMENT

18

VII. WITHDRAWAL AND SUSPENSION OF MEMBERS, TEMPORARY SUS-

PENSION AND TERMINATION OF OPERATIONS OF THE BANK 24

VIII. STATUS, IMMUNITIES, EXEMPTIONS AND PRIVILEGES

28

IX. AMENDMENTS, INTERPRETATION, ARBITRATION

81

X. FINAL PROVISIONS

32

Annex A - INITIAL SUBSCRIPTIONS TO THE AUTHORIZED CAPITAL

STOCK FOR COUNTRIES WHICH MAY BECOME MEMBERS IN

ACCORDANCE WITH ARTICLE 64

34

Annex B- ELECTION OF DIRECTORS

38
AGREEMENT ESTABLISHING

THE ASIAN DEVELOPMENT BANK

THE CONTRACTING PARTIES

CONSIDERING the importance of closer economic co-operation as a means for achieving the most efficient utilization of resources and for accelerating the economic development of Asia and the Far East;

REALIZING the significance of making additional development financing available for the region by mobilizing such funds and other resources both from within and

outside the region, and by seeking to create and foster

conditions conducive to increased domestic savings and greater flow of devel- opment funds into the region;

ECOGNIZ the desirability of promoting the harmonious growth ne economies or the region and the expansion of extema trade or membe countries:

CONVINCED that the establishment of a financial institution that is Asian in its basic character would serve these ends;

HAVE AGREED to establish hereby the Asian Development Bank (here- inafter called the "Bank") which shall operate in accordance with the following
ARTICLES OF AGREEMENT

CHAPTER I

PURPOSE, FUNCTIONS AND MEMBERSHIP

Article 1

PURPOSE

The purpose of the Bank shall be to foster economic growth and co- operation in the region of Asia and the Far East (hereinafter referred to as the "region") and to contribute to the acceleration of the process of economic development of the developing member countries in the region, collectively and individually. Wherever used in this Agreement, the terms "region of

Asia and the Far East" and "region" shall comprise the territories of Asia and the Far East included in the Terms of Reference of the United Nations

Economic Commission for Asia and the Far East.

Article 2

FUNCTIONS

To fulfil its purpose, the Bank shall have the following functions:

(i) to promote investment in the region of public and private capital for development purposes;

to utilize the resources at its disposal for financing development of the developing member countries in the region, giving priority to those regional, sub-regional as well as national projects and programmes which will contribute most effectively to the harmonious economic growth of the region as a whole, and having special regard to the needs of the smaller or less developed member countries in the region;

(iti) to meet requests from members in the region to assist them in the co- ordination of their development policies and plans with a view to achieving better utilization of their resources, making their economies more complementary, and promoting the orderly expansion of their foreign trade, in particular, intra-regional trade;

to provide technical assistance for the preparation, financing and execu- tion of development projects and programmes, including the formula- tion of specific project proposals:

(v)

to co-operate, in such manner as the Bank may deem appropriate, with- in the terms of this Agreement, with the United Nations, its organs and subsidiary bodies including, in particular, the Economic Commis-

2
sion for Asia and the Far East, and with public international organiza- ions and other international institutions, as well as national entities

(vi) to undertake such other activities and provide such other services as may advance its purpose.

Article 3

MEMBERSHIP

1. Membership in the Bank shall be open to: (1) members and asso- ciate members of the United Nations Economic Commission for Asia and the

Far East; and (ii) other regional countries and non-regional developed coun- tries which are members of the United Nations or of any of its specialized agencies.

Countries eligible for membership under paragraph I of this Article which do not become members in accordance with Artiele 64 of this Agree- ment may be admitted, under such terms and conditions as the Bank may determine, to membership in the Bank upon the affirmative vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of the members

3. In the case of associate members of the United Nations Economic

Commission for Asia and the Far East which are not responsible for the con- duet of their international relations, application for membership in the Bank shall be presented by the member of the Bank responsible for the interna- tional relations of the applicant and accompanied by an undertaking by such member that, until the applicant itself assumes such responsibility, the mem- ber shall be responsible for all obligations that may be incurred by the appli- cant by reason of admission to membership in the Bank and enjoyment of

"Country" as used in this Agreement shall

include a territory which is an associate member of the United Nations Eco- nomic Commission for Asia and the Far East.

CHAPTER TI

CAPITAL

Article 4

AUTHORIZED CAPITAL

I. The authorized capital stock of the Bank shall be one billion dollars ($1,000,000,000) in terms of United States dollars of the weight and fineness in effect on 31 January 1966. The dollar wherever referred to in this Agree- ment shall be understood as being a United States dollar of the above value.
Ibe authorized capital stock shall be divided into one hundred thousand (100,000) shares having a par value of ten thousand dollars ($10,000) each, which shall be available for subscription only by members in accordance with the provisions of Article 5 of this Agreement.

apital stock shall be divided into maid.

Shares baving an aggregate par value of five

hundred million dollars ($500,000,000) shall be paid-in shares, and shares having antage sate par value of five hundred million dollars (5500,000,000) shall be

3. The authorized capital stock of the Bank may be increased by the

Board of Governors, at such time and under such terms and conditions as it may deem advisable, by a vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of the members.*

Article 5

SUBSCRIPTION OF SHARES

1. Each member shall subscribe to shares of the capital stock of the

Bank. Each subscription to the original authorized capital stock shall be for paid-in shares and callable shares in equal parts. The initial number of shares to be subscribed by countries which become members in accordance with

Article 64 of this Agreement shall be that set forth in Annex A hereof. The initial number of shares to be subseribed by countries which are admitted to membership in accordance with paragraph 2 of Article 3 of this Agreement shall be 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 held by regional members below sixty (60) per cent of the total subscribed capital stock.

2. The Board of Governors shall at intervals of not less than five (5)

years review the capital stock of the Bank. In case of an increase in the authorized capital stock, each member shall have a reasonable opportunity to subseribe, under such terms and conditions as the Board of Governors shall determine, to a proportion of the increase of stock equivalent to the proportion which its stock therefor subscribed bears to the total subscribed capital stock immediately prior to such increase; provided, however, that the foregoing provision shall not apply in respect of any inerease or portion of an increase in the authorized capital stock intended solely to give effect to determinations of the Board of Governors under paragraphs 1 and 3 of this Article. No mem- ber shall be obligated to subscribe to any part of an increase of capital stock

3. The Board of Governors may. at the request of a member, increase the subscription of such member on such terms and conditions as the Board may determine; provided, however, that no such increase in the subscription of any member shall be authorized which would have the effect of reducing the percentage of capital stock held by regional members below sixty (60)

• The authorized capital stock was raised by $100 million to $1,100 million on 25 November 1966, the additional capital divided into 10,000 shares of which 5,000 are paid-in shares and 5,000 are callable shares.
percent of the total subscribed capital stock The Board of Governors shall pay special regard to the request of any regional member having less than six

(6) percent of the subscribed capital, stock to increase its proportionate share thereof.

4. Shares of stock initially subscribed by members shall be issued at par.

Other shares shall be issued at par unless the Board of Governors by a vote of a majority of the total number of Governors, representing a majority of the total voting power of the members, decides in special circumstances to issue them on other terms.

shall bothe pleaded or pt to the Bad in acanc

with Chapter VIl of this Agreement.

6. The liability of the members on shares shall be limited to the unpaid portion of their issue price.

7. No member shall be liable, by reason of its membership, for obliga- tions of the Bank.

Article 6

PAYMENT OF SUBSCRIPTIONS

1. Payment of the amount initially subscribed by each Signatory to this

Agreement which becomes a member in accordance with Article 64 to the paid-in capital stock of the Bank shall be made in five (5) instalments, of twenty (20) per cent each of such amount. The first instalment shall be paid by each member within thirty (30) days after entry into force of this

Agreement, or on or before the date of deposit on its behalf of its instrument of ratification or acceptance in accordance with paragraph 1 of Article 64, whichever is later. The second instalment shall become due one (1) year from the entry into force of this Agreement. The remaining three (3) instal- ments shall each become due successively one (1) year from the date on which the preceding instalment becomes due.

2. Of each instalment for the payment of initial subscriptions to the original paid-in capital stock:

(a) Fifty (50) per cent shall be paid in gold or convertible currency; and (b) Fifty (50) per cent in the currency of the member.

3. The Bank shall accept from any member promissory notes or other obligations issued by the Government of the member, or by the depository designated by such member, mn lieu of the amount to be paid in the currency of the member pursuant to paragraph 4 (bot this Article, provided such is not required by the Bank for the conduct of its operations.

Such notes or

obligations shall be non-negotiable, non-interest-bearing,

and payable to

the Bank at par value upon demand. Subject to the provisions of paragraph 2 (i) of Article 24, demands upon such notes or obligations payable in con- vertible currencies shall, over reasonable periods of time, be uniform in per- centage on all such notes or obligations.

5
4.

Each payment of a member in its own currency under paragraph 2 (b)

of this Article shall be in such amount as the Bank, after such consultation with the International Monetary Fund as the Bank may consider necessary and utilizing the par value established with the International Monetary Fund, if any, determines to be equivalent to the full value in terms of dollars of the portion of the subscription being paid. The initial payment shall be in such amount as the member considers appropriate hereunder but shall be subject to such adjustment, to be effected within ninety (90) days of the date on which such payment was due, as the Bank shall determine to be necessary to constitute the full dollar equivalent of such payment.

5. Payment of the amount subseribed to the callable capital stock of the

Bank shall be subject to call only as and when required by the Bank to meet its obligations incurred under sub-paragraphs (i) and (iv) of Article Il on borrowings of funds for inclusion in its ordinary capital resources or on guarantees chargeable to such resources.

6. In the event of the call referred to in paragraph 5 of this Article, pay- ment may be made at the option of the member in gold, convertible currency or in the currency required to discharge the obligations of the Bank for the purpose of which the call is made.

Calls on unpaid subscriptions shall be

uniform in percentage on all callable shares.

7. The Bank shall determine the place for any payment under this Article, provided that, until the inaugural meeting of its Board of Governors, the pay- ment of the first instalment referred to in paragraph of this Article shall be made to the Secretary-General of the United Nations, as Trustee for the Bank

Article 7

ORDINARY CAPITAL RESOURCES

As used in this Agreement, the term "ordinary capital resources" of the

Bank shall include the following:

authorized capital stock of the Bank, including both paid-in and callable shares, subscribed pursuant to Article 5 of this Agree- lent, except such part thereor as may be set aside into one c

(ii)

(iv)

Article 19 of this Agreement;

funds raised by borrowings of the Bank by virtue of powers con- ferred by sub-paragraph (i) of Article 21 of this Agreement, to which the commitment to calls provided for in paragraph 5 of

Article 6 of this Agreement is applicable;

inde recervod in repayment of loans or agarantees made will he resources modicated intu andal or this Aracie income derived from loans made from the aforementioned funds or from guarantees to which the commitment to calls set forth in paragraph 5 of Article 6 of this Agreement is applicable; and
(v) any other funds or income received by the Bank which do not form part of its Special Funds resources referred to in Article 20 of this Agreement.

CHAPTER III

OPERATIONS

Article 8

USE OF RESOURCES

The resources and facilities of the Bank shall be used exclusively to un- plement the purpose and functions set forth respectively in Articles 1 and 2

of this Agreement.

Arficle 9

ORDINARY AND SPECIAL OPERATIONS

1. The operations of the Bank shall consist of ordinary operations and special operations.

2. Ordinary operations shall be those financed from the ordinary capital resources of the Bank.

3. Special operations shall be those financed from the Special Funds resources referred to in Article 20 of this Agreement.

Article 10

SEPARATION OF OPERATIONS

1. The ordinary capital resources and the Special Funds resources of the

Bank shall at all times and in all respects be held, used, committed, invested or otherwise disposed of entirely separate from each other. The financial statements of the Bank shall show the ordinary operations and special operations separately.

2. The ordinary capital resources of the Bank shall under no circumstances be charged with, or used to discharge, losses or liabilities arising out of special operations or other activities for which Special Funds resources were originally used or committed.

3. Expenses appertaining directly to ordinary operations shall be charged to the ordinary capital resources of the Bank. Expenses appertaining directly to special operations shall be charged to the Special Funds resources. Any other expenses shall be charged as the Bank shall determine.

7
Article 11

RECIPIENTS AND METHODS OF OPERATION

Subject to the conditions stipulated in this Agreement, the Bank may provide or facilitate financing to any member, or any agency, instrumentality or political subdivision thereof, or any entity or enterprise operating in the territory of a member, as well as to international or regional agencies or entities concerned with economic development of the region. The Bank may carry out its operations in any of the following ways:

(1)

by making or participating in direct loans with its unimpaired paid-in capital and, except as provided in Article 17 of this

Agreement, with its reserves and undistributed surplus; or with the unimpaired Special Funds resources;

(ii)

by making or participating in direct loans with funds raised by the Bank in capital markets or borrowed or otherwise acquired by the Bank for inclusion in its ordinary capital resources;

by investment of funds referred to in (i) and (ii) of this Article in the equity capital of an institution or enterprise, provided no such investment shall be made until after the Board of Governors, by a vote of a majority of the total number of Governors, repre- senting a majority of the total voting power of the members, shall have determined that the Bank is in a position to com- mence such type of operations; or

Whole or in part, Moans for pime de secondar abiga d in by the Bank.

Article 12

LIMITATIONS ON ORDINARY OPERATIONS

The total amount outstanding of loans, equity mvestments and guar ntees made by the Bank in its ordinary operations shal not ag any um exceed the total amount of its unimpaired subscribed capital, reserves and surplus included in its ordinary capital resources, exelusive of the special reserve provided for by Article 17 of this Agreement and other reserves not avail- able for ordinary operations.

2. In the case of loans made with funds borrowed by the Bank to which the commitment to calls provided for by paragraph 5 of Article 6 of this

Agreement is applicable, the total amount of principal outstanding and payable to the Bank in a specific currency shall not at any time exceed the total amount of the principal of outstanding borrowings by the Bank that are pay- able in the same currency.

3. In the case of funds invested in equity capital out of the ordinary capital resources of the Bank, thetotal amount invested

8
shall not exceed ten (10) per cent of the aggregate amount of the unimpaired paid-in capital stock of the Bank actually paid up at any given time together with the reserves and surplus included in its ordinary capital resources, ex- clusive of the special reserve provided for in Article 17 of this Agreement.

4. The amount of any equity investment shall not exceed such percentage of the equity capital of the entity or enterprise concerned as the Board of Di- rectors shall in each specific case determine to be appropriate, The Bank shall not seek to obtain by such an investment a controlling interest in the entity or enterprise concerned, except where necessary to safeguard the in- vestment of the Bank.

Article 18

PROVISION OF CURRENCIES FOR DIRECT LOANS

In making direct loans or participating in them, the Bank may provide financing in any of the following ways:

(i) by furnishing the borrower with currencies other than the cur- rency of the member in whose territory the project concerned is to be carried out (the latter currency hereinafter to be called "local currency"), which are necessary to meet the foreign ex- change costs of such project; or tre of i, which ate by providing financing to meet local expenditures on the project concerned, where it can do so by supplying local currency with- out selling any of its holdings in gold or convertible currencies.

In special cases when, in the opinion of the Bank, the project causes or is likely to cause undue loss or strain on the balance of payments of the member in whose territory the project is to be carried out, the financing granted by the Bank to meet local expenditures may be provided in currencies other than that of such member; in such cases, the amount of the financing granted by the Bank for this purpose shall not exceed a reason- able portion of the total local expenditure incurred by the bor-

Article 14

OPERATING PRINCIPLES

The operations of the Bank shall be conducted in accordance with the following principles:

(i)

the operations of the Bank shall provide principally for the nancing of specine protects. including those torming part out national, sub-regional or regional development programme.

may, however, include loans to, or guarantees of loans made to, national development banks or other suitable entities, in order that the latter may finance specifie development projects whose

9
(xil)

(xili)

(xiv)

expenditures in connexion with the project as they are actually incurred;

The Bank shall take the necessary measures to ensure that the proceeds of any loan made, guaranteed or participated in by the

Bank are used only for the purposes for which the loan was granted and with due attention to considerations of economy and efficiency;

he sank shall pav due recar is proportionate amount eat its resources being used for th benefit of any member;

The Bank shall seek to maintain reasonable diversification in its investments in equity capital; it shall not assume responsibility for managing any entity or enterprise in which it has an invest- ment, except where necessary to safeguard its investments; and

The Bank shall be guided by sound banking principles in its operations.

Article 15

TERMS AND CONDITIONS FOR DIRECT LOANS

AND GUARANTEES

1. In the case of direct loans made or participated in or loans guaranteed by the Bank, the contract shall establish, in conformity with the operating prin- ciples set forth in Article 14 of this Agreement and subject to the other provi- sions of this Agreement, the terms and conditions for the loan or the guarantee

operations with funds provided under paragraph 1 (it) of Article 19, the rules and regulations of the Bank provide otherwise.

Guarantees by the Bank shall

also provide that the Bank may terminate its liability with respeet to interest if, upon default by the borrower and the guarantor, if any, the Bank offers to purchase, at par and interest accrued to a date designated in the offer, the bonds or other obligations guaranteed.

2. Where the recipient of loans or guarantees of loans is not itself a mem- ber, the Bank may, when it deems it advisable, require that the member in whose territory the project concerned is to be carried out, or a public agency or any instrumentality of that member acceptable to the Bank, guarantee the repayment of the principal and the payment of interest and other charges on the loan in accordance with the terms thereof.

3. The loan or guarantee contract shall expressly state the currency in which all payments to the Bank thereunder shall be made. At the option of

11
3. Whenever necessary to meet contractual payments of interest, other charges or amortization on borrowings of the Bank in its ordinary operations, or to meet its liabilities with respect to similar payments in respect of loans guaranteed by it, chargeable to its ordinary capital resources, the Bank may call an appropriate amount of the uncalled subscribed callable capital in ac- cordance with paragraphs 6 and 7 of Article 6 of this Agreement.

n cases of default in respect of a loan made rom borrowed func

• cuaranteed by the bank as part of its ordinary operations the bank ma it it believes that the default may be ot long duration, call an additional amount of such callable capital not to exceed in any one (1) year one (1)

per cent of the total subscriptions of the members to such capital, for the following purposes:

(i) To redeem before maturity, or otherwise discharge, the Bank's liabil- ty on all or part of the outstanding principal of any loan guaran eed by it in respect of which the debtor is in default: an (ії)

to repurchase, or otherwise discharge, the Bank's liability on all or part of its own outstanding borrowing

5. If the Bank's subscribed callable capital stock shall be entirely called pursuant to paragraphs 3 and 4 of this Article, the Bank may, if necessary for the purposes specified in paragraph 3 of this Article, use or exchange the currency of any member without restriction, including any restriction imposed pursuant to paragraphs 2 (i) and (ii) of Article 24.

Article 19

SPECIAL FUNDS

1. The Bank may:

(i) set aside, by a vote of two-thirds of the total number of Governors, representing at least three-fourths of the total voting power of the members, not more than ten (10) per cent each of the portion of the unimpaired paid-in capital of the Bank paid by members pur- suant to paragraph 2 (a) of Article 6 and of the portion thereof paid pursuant to paragraph 2 (b) of Article 6, and establish there- with one or more Special Funds; and (li)

accept the administration of Special Funds which are designed to serve the purpose and come within the functions of the Bank.

Special Funds established by the Bank pursuant to paragraph 1 (i)

of this Article may be used to guarantee or make loans of high developmental priority, with longer maturities, longer deferred commencement of repayment and lower interest rates than those established by the Bank for its ordinary operations.

Such Funds may also be used on such other terms and conditions,

not inconsistent with the applicable provisions of this Agreement nor with the character of such Funds as revolving funds, as the Bank in establishing such Funds may direct.

13
3. Special Funds accepted by the Bank under paragraph 1 (i) of this

Article may be used in any manner and on any terms and conditions not inconsistent with the purpose of the Bank and with the agreement relating to such Funds.

4. The Bank shall adopt such special rules and regulations as may be required for the establishment, administration and use of each Special Fund.

Such rules and regulations shall be consistent with the provisions of this

Agreement, excepting those provisions expressly applicable only to ordinary operations of the Bank.

Article 20

SPECIAL FUNDS RESOURCES

As used in this Agreement, the term "Special Funds resources" shall refer to the resources of any Special Fund and shall include:

(a) resources set aside from the paid-in capital to a Special Fund or other- wise initially contributed to any Special Fund;

(b) funds accepted by the Bank for inclusion in any Special Fund;

(c) funds repaid in respect of loans or guarantees financed from the re- sources of any Special Fund which, under the rules and regulations of the Bank governing that Special Fund, are received by such Spe- cial Fund;

(d) income derived from operations of the Bank in which any of the aforementioned resources or funds are used or committed if, under the rules and regulations of the Bank governing the Special Fund concerned, that income accrues to such Special Fund; and (e) any other resources placed at the disposal of any Special Fund.

СнАРтЕн IV

BORROWING AND OTHER MISCELLANEOUS POWERS

Article 21

GENERAL POWERS

In addition to the powers specified elsewhere in this Agreement, the Bank shall have the power to:

(i) borrow funds in member countries or elsewhere, and in this con- nexion to furnish such collateral or other security therefor as the

Bank shall determine, provided always that:

(a) before making a sale of its obligations in the territory of a coun try, the Bank shall have obtained its approval;

14
(b) where the obligations of the Bank are to be denominated in the currency of a member, the Bank, shall have obtained its approval;

(c) the Bank shall obtain the approval of the countries referred to in sub-paragraphs (a) and (b) of this paragraph that the proceeds may be exchanged for the currency of any member without restriction; and (d) before determining to sell its obligations in a particular coun- try, the Bank shall consider the amount of previous borrowing.

if any, in that country, the amount of previous borrowing in other countries, and the possible availability of funds in such other countries; and shall give due regard to the general prin- ciple that its borrowings should to the greatest extent possible be diversified as to country of borrowing.

(i) buy and sell securities the Bank has issued or guaranteed or in which it has invested, provided always that it shall have obtained the approval of any country in whose territory the securities are to be bought or sold;

guarantee securities in which it has invested in order to facilitate their sale;

(tv) "by anye, or or articipate fo the under consistent securite issuede of the Bank;

invest funds, not needed in its operations, in the territories of mem- bers in such obligations of members or nationals thereof as it may determine, and invest funds held by the Bank for pensions or simi- lar purposes in the territories of members in marketable securities issued by members or nationals thereof:

(vi) provide technical advice and assistance which serve its purpose and come within its functions, and where expenditures incurred in fur- nishing such services are not reimbursable, charge the net income of the Bank therewith; in the first five 5) years of its operations, the Bank may use up to two (2) percent of its paid-in capital for furnishing such services on a non-reimbursable basis; and (vii)

exercise such other powers and establish such rules and regulations as may be necessary or appropriate in furtherance of its purpose and functions, consistent with the provisions of this Agreement.

Article 22

NOTICE TO BE PLACED ON SECURITIES

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 Gov- ernment, unless it is in fact the obligation of a particular Government, in which case it shall so state.

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CHAPTER V

CURRENCIES

Article 23

DETERMINATION OF CONVERTIBILITY

Whenever it shall become necessary under this Agreement to determine whether any currency is convertible,

such determination shall be made by

the Bank after consultation with the International Monetary Fund.

Article 24

USE OF CURRENCIES

1. Members may not maintain or impose any restrictions on the holding or use by the Bank or by any recipient from the Bank, for payments in ány country, of the following:

(i) gold or convertible currencies received by the Bank in payment of subscriptions to its capital stock, other than that paid to the Bank by members pursuant to paragraph 2 (b) of Article 6 and restricted pur- suant to paragraphs 2 (i) and (it) of this Article;

(li)

currencies of members purchased with the gold or convertible cur- rencies referred to in the preceding sub-paragraph;

(ili)

currencies obtained by the Bank by borrowing, pursuant to sub-para- graph (i) of Article 21 of this Agreement, for inclusion in its ordinary capital recources;

(iv) gold or currencies received by the Bank in payment on account of principal, interest, dividends or other charges in respect of loans or investments made out of any of the funds referred to in sub-para- graphs (i) to (ili) of this paragraph or in payment of fees in respect of guarantees made by the Bank; and (V) currencies, other than the member's own currency, received by the member from the Bank in distribution of the net income of the

Bank in accordance with Article 40 of this Agreement.

2. Members may not maintain or impose any restriction on the holding or use by the Bank or by any recipient from the Bank, for payments in any country, of currency of a member received by the Bank which does not come within the provisions of the preceding paragraph, unless:

(i) a developing member country, after consultation with and subject to periodie review by the Bank, restricts in whole or in part the use of such currency to payments for goods or services produced and intended for use in its territory; or

16
(ii) any other member whose subscription has been determined in Part

A of Annex A hereof and whose exports of industrial products do not represent a substantial proportion of its total exports, deposits with its instrument of ratification or acceptance a declaration that it desires the use of the portion of its subscription paid pursuant to paragraph 2 (b) of Article 6 to be restricted, in whole or in part, to payments for goods or services produced in its territory; provided that such restrictions be subject to periodie review by and consulta- tion with the Bank and that any purchases of goods or services in the territory of that member, subject to the usual consideration of competitive tendering, shall be first charged against the portion of its subscription paid pursuant to paragraph 2 (b) of Article 0; or such currency forms part of the Special Funds resources of the Bank available under paragraph 1 (ii) of Article 19 and its use is subject to special rules and regulations.

3. Members may not maintain or impose any restrictions on the holding or use by the Bank, for making amortization payments or anticipatory pay- ments or for repurchasing in whole or in part the Bank's own obligations, of currencies received by the Bank in repayment of direct loans made out of its ordinary capital resources, provided, however, that until the Bank's sub- scribed callable capital stock has been entirely called, such holding or use shall be subject to any limitations imposed pursuant to paragraph 2 (i) of this Article except in respect of obligations payable in the currency of the member concerned.

4. Gold or currencies held by the Bank shall not be used by the Bank to purchase other currencies of members or non-members except:

(i) in order to meet its obligations in the ordinary course of its business; or (ii) pursuant to a decision of the Board of Directors adopted by a vote of the Directors representing not less than two-thirds of the total voting power of the members.

Nothing herein contained shall prevent the Bank from using the cur- rency of any member for administrative expenses incurred by the Bank in the territory of such member.

Article 25

MAINTENANCE OF VALUE OF THE CURRENCY HOLDINGS

OF THE BANK

1. Whenever (a) the par value in the International Monetary Fund of the currency of a member is reduced in terms of the dollar defined in Article 4 of this Agreement, or (b) in the opinion of the Bank, after consultation with the International Monetary Fund, the foreign exchange value of a member's currency has depreciated to a significant extent, that member shall pay to the

Bank within a reasonable time an additional amount of its currency required to maintain the value of all such currency held by the Bank, excepting (a)

17
currency derived by the Bank from its borrowings and (b) unless otherwise provided in the agreement establishing such Funds, Special Funds resources accepted by the Bank under paragraph 1 (ii) of Article 19.

2. Whenever (a) the par value in the International Monetary Fund of the currency of a member is increased in terms of the said dollar, or (b) in the opinion of the Bank, after consultation with the International Monetary

Fund, the foreign exchange value of a member's currency has appreciated to a significant extent, the Bank shall pay to that member within a reasonable time an amount of that currency required to adjust the value of all such currency held by the Bank excepting (a) currency derived by the Bank from its borrowings, and (b) unless otherwise provided in the agreement establish- ing such Funds, Special Funds resources accepted by the Bank under paragraph (ii) of Article 19.

3. The Bank may waive the provisions of this Article when a uniform proportionate change in the par value of the currencies of all its members takes place.

CHAPTER VI

ORGANIZATION AND MANAGEMENI

Article 26

STRUCTURE

The Bank shall have a Board of Governors, a Board of Directors, a Pres- ident, one or more Vice-Presidents and such other officers and staff as may be considered necessary.

Article 27

BOARD OF GOVERNORS: COMPOSITION

1. Each member shall be represented on the Board of Governors and shall appoint one Governor and one alternate. Each Governor and alternate shall serve at the pleasure of the appointing member. No alternate may vote except in the absence of his principal. At its annual meeting, the Board shall designate one of the Governors as Chairman who shall hold office until the election of the next Chairman and the next annual meeting of the Board.

2. Governors and alternates shall serve as such without remuneration from the Bank, but the Bank may pay them reasonable expenses incurred in attending meetings.

Article 28

BOARD OF GOVERNORS: POWERS

1. All the powers of the Bank shall be vested in the Board of Governors.

18
The Board of Governors may delegate to the Board of Directors any or all its powers, except the power to:

(i) admit new members and determine the conditions of their admission;

(i) increase or decrease the authorized capital stock of the Bank;

(i) suspend a member;

v) decide apocals from interpretations of applicatious of this Agree ent given oy the board or Director (v) authorize the conclusion of general agreements for co-operation with other international organizations;

(vi) elect the Directors and the President of the Bank;

i retreatin the rectors and their alternates ad the salary and other terms of the contract of service of the President:

(vili) approve, after reviewing the auditor's report, the general balance sheet and the statement of profit and loss of the Bank;

(ix) determine the reserves and the distribution of the net profits of the

Bank;

(x) amend this Agreement;

(xi) decide to terminate the operations of the Bank and to distribute its assets; and til exercise such other powers as are expressiv assed to the boar 1 covernor 1 1164 meemen

• The Board of Governors shall retain full power to exercise authorit ver any matter delegated to the board of rectors imder paragranco this Article.

4. For the purposes of this Agreement, the Board of Governors may, by a vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of the members, from time to time determine which countries or members of the Bank are to be regarded as developed or developing countries or members, taking into account appro- priate economic considerations.

Article 29

BOARD OF GOVERNORS: PROCEDURE

1. The Board of Governors shall hold an annual meeting and such other meetings as may be provided for by the Board or called by the Board of

Directors. Meetings of the Board of Governors shall be called, by the Board of Directors, whenever requested by five (5) members of the Bank,

SA maionity or the Governors shall constitute a ourum for any meetin f the Board of Governors, provided such majority represents not less tha two-thirds of the total voting power of the members.

19
3. The Board of Governors may by regulation establish a procedure where- by the Board of Directors may, when the latter deems such action advisable, obtain a vote of the Governors on a specific question without calling a meeting of the Board of Governors.

4. The Board of Governors, and the Board of Directors to the extent authorized, may establish such subsidiary bodies as may be necessary or ap- propriate to conduct the business of the Bank.

Article 30

BOARD OF DIRECTORS: COMPOSITION

The Board of Directors shall be composed of ten () member ho shallnot be members of the Board of Governors, and of whom (a) seven (7) shall be elected by the Governors representing regional members: and (b) three (3) by the Governors representing non-regional members.

Directors shall be persons of high competence in economic and financial matters and shall be elected in accordance with Annex B hereof.

(i) At the Second Annual Meeting of the Board of Governors after its inaugural meeting, the Board of Governors shall review the size and composition of the Board of Directors, and shall increase the number of

Directors as appropriate, paying special regard to the desirability, in the cir- cumstances at that time, of increasing representation in the Board of Directors of smaller less developed member countries.

Decisions under this paragraph

should be made by a vote of a majority of the total number of Governors, representing not less than two-thirds of the total voting power of the members

2. Each Director shall appoint an alternate with full power to act for him when he is not present. Directors and alternates shall be nationals of member countries. No two or more Directors may be of the same nationality nor may any two or more alternates be of the same nationality. An alternate may participate in meetings of the Board but may vote only when he is acting in place of his principal.

có elected.

chosen one hundred and eighty (180) days before the end of his term, a successor shall be chosen in accordance with Annex B hereof, for the remainder of the term, by the Governors who elected the former Director. A majority of the votes cast by such Governors shall be required for such election. If the office of a Director becomes vacant one hundred and eighty (180) days or less before the end of his term, a successor may similarly be chosen for the remainder of the term, by the Governors who elected the former Director, in which election a majority of the votes cast by such Governors shall be required. While the office remains vacant, the alternate of the former Di- rector shall exercise the powers of the latter, except that of appointing an alternate.

20
Article 31

BOARD OF DIRECTORS: POWERS

The Board of Directors shall be responsible for the direction of the gen- eral operations of the Bank and, for this purpose, shall, in addition to the powers assigned to it expressly by this Agreement, exercise all the powers delegated to it by the Board of Governors, and in particular:

(i) prepare the work of the Board of Governors;

(i) in conformity with the general directions of the Board of Gov-

take decisions concerning loans in equity capital, borrowing by the Bank, furnishing of technical as sistance and other operations of the Bank;

submit the accounts for each financial year for approval of the

Board of Governors at each annual meeting; and (iv) approve the budget of the Bank.

Article 32

BOARD OF DIRECTORS: PROCEDURE

1. The Board of Directors shall normally function at the principal office of the Bank and shall meet as often as the business of the Bank may require.

2. A majority of the Directors shall constitute a quorum for any meeting of the Board of Directors, provided such majority represents not less than two-thirds of the total voting power of the members.

3. The Board of Governors shall adopt regulations under which, if there is no Director of its nationality, a member may send a representative to attend, without right to vote, any meeting of the Board of Directors when a matter particularly affecting that member is under consideration.

Article 33

VOTING

1. The total voting power of each member shall consist of the sum of its basic votes and proportional votes.

(i) The basic votes of each member shall consist of such number of votes as results from the equal distribution among all the members of twenty (20) per cent of the aggregate sum of the basic votes and proportional votes of all the members.

(li)

The number of the proportional votes of each member shall be equal to the number of shares of the capital stock of the Bank held by that member.

21
2. In voting in the Board of Governors, each Governor shall be entitled to cast the votes of the member he represents. Except as otherwise expressly provided in this Agreement, all matters before the Board of Governors shal be decided by a majority of the voting power represented at the meeting

3. In voting in the Board of Directors, each Director shall be entitled to cast the number of votes that counted towards his election which votes need not be cast as a unit. Except as otherwise expressly provided in this

Agreement, all matters before the Board of Directors shall be decided by a majority of the voting power represented at the meeting.

Article 34

THE PRESIDENT

I. The Board of Governors, by a vote of a majority of the total num- ber of Governors, representing not less than a majority of the total voting power of the members, shall elect a president of the Bank. He shall be a national of a regional member country. The President, while holding office, shall not be a Governor or a Director or an alternate for either.

2. The term of office of the President shall be five (5) years. He may be re-elected. He shall, however, cease to hold office when the Board of

Governors so decides by a vote of two-thirds of the total number of Gov- ernors, representing not less than two-thirds of the total voting power of the members. If the office of the President for any reason becomes vacant more than one hundred and eighty (180) days before the end of his term, a successor shall be elected for the unexpired portion of such term by the

Board of Governors in accordance with the provisions of paragraph of this

Article. If such office for any reason becomes vacant one hundred and eighty

(180) days or less before the end of his term, a successor may Similarly be elected for the unexpired portion of such term by the Board of Governors.

3. The President shall be Chairman of the Board of Directors but shall not vote, except a deciding vote in case of an equal division. He may participate in meetings of the Board of Governors but shall not vote.

4, The President shall be the legal representative of the Bank

5. The President shall be chief of the staff of the Bank and shall con- duct, under the direction of the Board of Directors, the current business of le bank He shall be responsible for the organization, appointment and di issal of the orcers and start in accorcance with regulations adopted the Board of Directors.

the pa. In un oning the officers ande are est Predet fall shet to technical competence, pay due regard to the recruitment of personnel on as wide a regional geographical basis as possible.

22
Arlicle 35

VICE-PRESIDENT (S)

1. One or more Vice-Presidents shall be appointed by the Board of

Directors on the recommendation of the President. Vice-President(s) shall hold office for such term, exercise such authority and perform such functions in the administration of the Bank, as may be determined by the Board of

Directors. In the absence or incapacity of the President, the Vice-President or, if there be more than one, the ranking Vice-President, shall exercise the authority and perform the functions of the President.

2. Vice-Presidents) may participate in meetings of the Board of Direc- tors but shall have no vote at such meetings, except that the Vice-President or ranking Vice-President, as the case may be, shall cast the deciding vote when acting in place of the President.

Article 36

PROHIBITION OF POLITICAL ACTIVITY:

THE INTERNATIONAL CHARACTER OF THE BANK

1. The Bank shall not accept loans or assistance that may in any way prejudice, limit, deflect or otherwise alter its purpose or functions.

2. The Bank, its President, Vice-Presidents), officers and staff shall not interfere in the political affairs of any member, nor shall they be influenced in their decisions by the political character of the member concerned. Only economic considerations shall be relevant to their decisions. Such considera- tions shall be weighed impartially in order to achieve and carry out the pur- pose and functions of the Bank.

3. The President, Vice-Presidents), officers and staff of the Bank, ir he discharge of their offices owe their duty entirely to the Bank and to n other authority. Each member of the Bank shall respect the international character of this duty and shall refrain from all attempts to influence any of them in the discharge of their duties.

Article 37

OFFICE OF THE BANK

The principal office of the Bank shall be located in Manila, Philip- pines.

The Bank may establish agencies or branch offices elsewhere.

Article 38

CHANNEL OF COMMUNICATIONS, DEPOSITORIES

Each member shall designate an appropriate official entity with which the Bank may communicate in connexion with any matter arising under this

Acreement.

23
2. Each member shall designate its central bank, or such other agency as may be agreed upon with the Bank, as a depository with which the Bank may keep its holdings of currency of that member as well as other assets of the Bank.

Article 39

WORKING LANGUAGE, REPORTS

1. The working language of the Bank shall be English.

2. The Bank shall transmit to its members an Annual Report containing an audited statement of its accounts and shall publish such Report. It shall also transmit quarterly to its members a summary statement of its financial position and a profit and loss statement showing the results of its operations, n the carry Be out of its so pose and unciner reports as it deems desirable

Such reports shal be trans

mitted to the members of the Bank,

Article 40

ALLOCATION OF NET INCOME

•The Board of Governors shall determine annually what part of th et income of the bank, including the net income accruing to Special Fund shall be allocated, alter making provision for reserves, to surplus and what part, if any, shall be distributed to the members.

n 2 The ditribut on mee od tarn the preceding paragraph shall be made

by each member

the Board of Governors shandetermisuch manner and in such currency as

CHAPTER VII

WITHDRAWAL AND SUSPENSION OF MEMBERS,

TEMPORARY SUSPENSION AND TERMINATION

OF OPERATIONS OF THE BANK

Article 41

WITHDRAWAL

1. Any member may withdraw from the Bank at any time by delivering a notice in writing to the Bank at its principal office.

2. Withdrawal by a member shall become effective, and its membership shall cease, on the date specified in its notice but in no event less than six

24
(6) months after the date that notice has been received by the Bank. How- ever, at any time before the withdrawal becomes finally effective, the mem- ber may notify the Bank in writing of the cancellation of its notice of inten- tion to withdraw.

S. A withdrawing member shall remain liable for all direct and con- tingent obligations to the Bank to which it was subject at the date of deliv- ery of the withdrawal notice. If the withdrawal becomes finally effective, the member shall not incur any liability for obligations resulting from operations of the Bank effected after the date on which the withdrawal notice was received by the Bank.

Article 42

SUSPENSION OF MEMBERSHIP

I. If a member fails to fulfil any of its obligations to the Bank, the

Board of Governors may suspend such member by a vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of the members.

2. The member so suspended shall automatically cease to be a member of the Bank one (1) year from the date of its suspension unless the Board of Governors, during the one-year period, decides by the same majority neces- sary for suspension to restore the member to good standing.

3 While under suspension, a member shall not be entitled to exercise any rights under this Agreement, except the right of withdrawal, but shall remain subject to all its obligations.

Article 43

SETTLEMENT OF ACCOUNTS

1. After the date on which a country ceases to be a member, it shall remain liable for its direct obligations to the Bank and for its contingent liabilities to the Bank so long as any part of the loans or guarantees con- tracted before it ceased to be a member is outstanding; but it shall not incur linbilities with respect to loans and guarantees entered into thereafter by the

Bank nor share either in the income or the expenses of the Bank.

2. At the time a country ceases to be a member, the Bank shall arrange for the repurchase of such country's shares by the Bank as a part of the seltlement of accounts with such country in accordance with the provisions the country ceases to be a member.

The payment for shares repurchased by the Bank under this Article shall be governed by the following conditions:

25
Any amount due to the country concerned for its shares shall be withheld so long as that country, its central bank or any of its agencies, instrumentalities or political subdivisions remains liable, as borrower or guarantor, to the Bank and such amount may, at the option of the Bank, be applied on any such liability as it matures. No amount shall be withheld on account of the contingent liability of the country for future calls on its subscription for shares in accordance with paragraph 5 of Article 6 of this Agreement. In any event, no amount due to a mem- ber for its shares shall be paid until six (6) months after the date on which the country ceases to be a member.

(ії)

Payments for shares may be made from time to time, upon surrender of the corresponding stock certificates by the coun- try concerned, to the extent by which the amount due as the repurchase price in accordance with paragraph 2 of this Ar- ticle exceeds the aggregate amount of liabilities, on loans and guarantees referred to in sub-paragraph (i) of this paragraph, until the former member has received the full repurchase price (їїї)

Payments shall be made in such available currencies as the

Bank determines, taking into account its financial position.

If losses are sustained by the Bank on any guarantees or loans which were outstanding on the date when a country ceased to be a member and the amount of such losses exceeds the amount of the reserve provided against losses on that date, the country concerned shall repay,

upon demand, the amount by which

the 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 unpaid subscriptions in accordance with paragraph 5 to Article 6 of this Agreement, to the same extent that it would have been required to respond if the im- pairment of capital had occurred and the call had been made at the time the repurchase price of its shares was determined

4. If the Bank terminates its operations pursuant to Article 45 of this

Agreement within six (6) months of the date upon which any country ceases to be a member, all rights of the country concerned shall be determined in

inde is the ten real til be air so

accordance with the provisions of Articles 45 to 47 of this Agreement. Such country shall be considered as still a member for purposes of such Articles but shall have no voting rights.

Article 44

TEMPORARY SUSPENSION OF OPERATIONS

the Board of Directors may temporarily suspend

operations in respect of new loans and guarantees, pending an opportunity for further consideration and action by the Board of Governors.

26
CHAPTER VIll

STATUS, IMMUNITIES, EXEMPTIONS AND PRIVILEGES

Article 48

PURPOSE OF CHAPTER

To enable the Bank effectively to fulfil its purpose and carry out the functions entrusted to it, the status, immunities, exemptions and privileges set forth in this Chapter shall be accorded to the Bank in the territory of each member.

Article 49

LECAL STATUS

The Bank shall possess full juridical personality and, in particular, full capacity:

(i) to contract;

(ii) to acquire, and dispose of, immovable and movable property; and (il) to institute legal proceedings.

Article 50

IMMUNITY FROM JUDICIAL PROCEEDINGS

1. The Bank shall enjoy immunity from every form of legal process, except in cases arising out of or in connexion with the exercise of its powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities, in which cases actions may be brought against the Bank in a court of competent jurisdiction in the territory of a country in which the Bank has its principal or a branch office, or has ap- pointed an agent for the purpose of accepting service or notice of process,

2. Notwithstanding the provisions of paragraph 1 of this Article, no action shall be brought against the Bank by any member, or by any agency or instrumentality of a member, or by any entity or person direetly or indi- rectly acting for or deriving claims from a member or from any agency or instrumentality of a member, Members shall have recourse to such special procedures for the settlement of controversies between the Bank and its mem of the Bank, or in contracts entered into with the Bank.

one to with the banks and regulation

8. Property and assets of the Bank, shall, wheresoever located and by whomsoever held, be immune from all forms of seizure, attachment or exe- cution before the delivery of final judgment against the Bank.

28
Article 51

IMMUNITY OF ASSETS

Property and assets of the Bank, wheresoever located and by whomso- ever held, shall be immune from search, requisition, confiscation, expropria- tion or any other form of taking or foreclosure by executive or legislative action.

Article 52

IMMUNITY OF ARCHIVES

The archives of the Bank, and, in general, all documents belonging to it, or held by it, shall be inviolable, wherever located.

Article 53

FREEDOM OF ASSETS FROM RESTRICTIONS

To the extent necessary to carry out the purpose and functions of the

Bank effectively, and subject to the provisions of this Agreement, all property and assets of the Bank shall be free from restrictions, regulations, controls and moratoria of any nature.

Article 54

PRIVILEGE FOR COMMUNICATIONS

Official communications of the Bank shall be accorded by each member treatment not less favourable than that it accords to the official communi- cations of any other member.

Article 55

IMMUNITIES AND PRIVILEGES OF BANK PERSONNEL

All Governors, Directors, alternates, officers and employees of the Bank, including experts performing missions for the Bank:

(i) shall be immune from legal process with respect to acts performed by them in their official capacity, except when the Bank waives the immunity;

where they are not local citizens or nationals, shall be accorded the same immunities from immigration restrictions, alien registration requirements and national service obligations, and the same faci- lities as regards exchange regulations, as are accorded by members to the representatives, officials and employees of comparable rank of other members; and

29
(ill) shall be granted the same treatment in respect of travelling facili- ties as is accorded by members to representatives, officials and employees of comparable rank of other members.

Article 56

EXEMPTION FROM TAXATION

1. The bank, its assets, property, income and its operations and tran- sactions, shall be exempt from all taxation and from all customs duties. The

Bank shall also be exempt from any obligation for the payment, withholding or collection of any tax or duty.

2. No tax shall be levied on or in respect of salaries and emoluments paid by the Bank to Directors, alternates, officers or employees of the Bank, including experts performing missions for the Bank, except where a member deposits with its instrument of ratification or acceptance a declaration that such member retains for itselt and its political subdivisions the right to tax salaries and emoluments paid by the Bank to citizens or nationals of such member.

No tax of any kind shall be levied on any obligation or security issued by the Bank, including any dividend or interest thereon, by whom- soever held:

(i) which discriminates against such obligation or security solely be- cause it is issued by the Bank; or (ii) if the sole jurisdictional basis for such taxation is the place or cur- rency in which it is issued, made payable or paid, or the location of any office or place of business maintained by the Bank.

4. No tax of any kind shall be levied on any obligation or security guaranteed by the Bank, including any dividend or interest thereon, by whom- soever held:

(i) which discriminates against such obligation or security solely be-

cause it is guaranteed by the Bank; or (i) if the sole jurisdictional basis for such taxation is the location of any office or place of business maintained by the Bank

Article 57

IMPLEMENTATION

Each member, in accordance with its juridical system, shall promptly take such action as is necessary to make effective in its own territory the provisions set forth in the Chapter and shall inform the Bank of the action w luch it has taken on the matter.

30
Article 58

WAIVER OF IMMUNITIES, EXEMPTIONS AND PRIVILEGES

The Bank at its discretion may waive any of the privileges, immunities and exemptions conferred under this Chapter in any case or instance, in such manner and upon such conditions as it may determine to be appropriate in the best interests of the Bank.

СпАРтЕк IX

AMENDMENTS, INTERPRETATION, ARBITRATION

Article 59

AMENDMENTS

1. This Agreement may be amended only by a resolution of the Board of Governors approved by a vote of two-thirds of the total number of Gov- ernors, representing not less than three-fourths of the total voting power of the members.

2. Notwithstanding the provisions of paragraph 1 of this Article, the unanimous agreement of the Board of Governors shall be required for the approval of any amendment modifying:

(i) the right to withdraw from the Bank;

(i) the limitations on liability provided in paragraphs 6 and 7 of Arti- cle 5; and (il) the rights pertaining to purchase of capital stock provided in para- graph 2 of Article 5.

3. Any proposal to amend this Agreement, whether emanating from a member or the Board of Directors, shall be communicated to the Chairman of Governors. When an amendment has been adopted, the Bank shall so cer- tify in an official communication addressed to all members. Amendments shall enter into force for all members three (3) months after the date of the official communication unless the Board of Governors specifies therein a different period.

Article 60

INTERPRETATION OR APPLICATION

1. Any question of interpretation or application of the provisions of this

Agreement arising between any member and the Bank or between two or more members of the Bank, shall be submitted to the Board of Directors

31
2. In any case where the Board of Directors has given a decision under paragraph 1 of this Article, any member may require that the question be referred to the Board of Governors, whose decision shall be final.

Pending

the decision of the Board of Governors, the Bank may, so far as it deems necessary, act on the basis of the decision of the Board of Directors.

Article 61

ARBITRATION

If a disagreement should arise between the Bank and a country which has ceased to be a member, or between the Bank and any member, after adoption of a resolution to terminate the operations of the Bank, such disagreement shall be submitted to arbitration by a tribunal of three arbitrators. One of the arbitrators shall be appointed by the Bank, another by the country con- cerned, and the third, unless the parties otherwise agree, by the President of the International Court of Justice or such other authority as may have been prescribed by regulations adopted by the Board of Governors.

A majority

vote of the arbitrators shall be sufficient to

reach a decision which shall

be final and binding upon the parties.

The third arbitrator shall be empowered

to settle all questions of procedure in any case where the parties are in dis- agreement with respect thereto.

Article 62

APPROVAL DEEMED GIVEN

Whenever the approval of any member is required before any act may be done by the Bank, approval shall be deemed to have been given unless the member presents an objection within such reasonable period as the Bank may fix in notifying the member of the proposed act.

CHAPTER X

FINAL PROVISIONS

Article 63

SIGNATURE AND DEPOSIT

1. The original of this Agreement in a single copy in the English lan- guage shall remain open for signature at the United Nations Economic Com- mission for Asia and the Far East, in Bangkok, until 31 January 1966 by

Governments of countries listed in Annex A to this Agreement.

This docu-

ment shall thereafter be deposited with the Secretary-General of the United

Nations (hereinafter called the "Depository").
2. The Depository shall send certified copies of this Agreement to all the Signatories and other countries which become members of the Bank.

Article 64

RATIFICATION OR ACCEPTANCE

1. This Agreement shall be subject to ratification or acceptance by the

Signatories. Instruments of ratification or acceptance shall be deposited with the Depository not later than 30 September 1966. The Depository shall duly notify the other Signatories of each deposit and the date thereof.

2. A Signatory whose instrument of ratification or acceptance is depo- sited before the date on which this Agreement enters into force, shall become a member of the Bank on that date. Any other Signatory which complies with the provisions of the preceding paragraph, shall become a member of the Bank on the date on which its instrument of ratification or acceptance is deposited.

Article 65

ENTRY INTO FORCE

This Agreement shall enter into force when instruments of ratification or acceptance have been deposited by at least fifteen (15) Signatories (including not less than ten [10] regional countries) whose initial subscriptions, as set forth in Annex A to this Agreement, in the aggregate comprise not less than sixty-five (65) per cent of the authorized capital stock of the Bank,

Article 66

COMMENCEMENT OF OPERATIONS

1. As soon as this Agreement enters into force, each member shall ap- point a Governor, and the Executive Secretary of the United Nations Eco- nomic Commission for Asia and the Far East shall call the inaugural meet- ing of the Board of Governors.

2. At its inaugural meeting, the Board of Governors:

(i) shall make arrangements for the election of Directors of the Bank in accordance with paragraph 1 of Article 30 of this Agreement; and （1） shall make arrangements for the determination of the date on which the Bank shall commence its operations.

3. The Bank shall notify its members of the date of the commencement of its operations.

DONE at the City of Manila, Philippines, on 4 December 1965, in a single copy in the English language which shall be brought to the United

Nations Economic Commission for Asia and the Far East, Bangkok, and there- after deposited with the Secretary-General of the United Nations, New York, in accordance with Article 63 of this Agreement
ANNEX A

INITIAL SUBSCRIPTIONS TO THE

AUTHORIZED CAPITAL STOCK FOR

COUNTRIES WHICH MAY BECOME

MEMBERS IN ACCORDANCE WITH

ARTICLE 64
Part A. REGIONAL COUNTRIES

Country 1.

2.

Afghanistan

Australia

Cambodia

Ceylon •

5. China, Republic of 6.

India

Tran 8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

Japan

Korea, Republic of

Laos

Malaysia

Nepal

New Zealand

Pakistan

Philippines

Republic of Vietnam

Singapore

Thailand

19. Western Samoa

Total

Amount of subscription (in million US dollars)

3,36 85.00 3.00 8.52 16.00 93.00 60.00 200.00 30.00 0.42 20,00 2.16 22.56 32.00 35.00 7.00 4.00 20.00 0.06 642.08

The following regional countries may become Signatories of this Agree- ment in accordance with Article 63, provided that at the time of signing, they shall respectively subscribe to the capital stock of the Bank in the following 2.

Country

Burma

Mongolia

Total

Amount of subscription (in million US dollars)

7.74 0.18 7.92

35
Part B. NON-REGIONAL COUNTRIES

Country

1. Belgium 2.

Canada 8.

Denmark 4.

Germany, Federal Republic of 5.

Italy 6.

Netherlands 1.

United Kingdom

8. United States

Total

Amount of subscription (in million US dollars)

5.00 25.00 5.00

30.00 10.00 11.00 10.00

200.00 296.00

The following non-regional countries which participated in the meeting of the Preparatory Committee on the Asian Development Bank in Bangkok from 21 October to 1 November 1965 and which there indicated interest in membership in the Bank, may become Signatories of this Agreement in accordance with Article 63, provided that at the time of signing, each such country shall subscribe to the capital stock of the Bank in an amount which shall not be less than five million dollars ($5,000,000):

1. Austria

3. Norway

2. Finland

4. Sweden

On or before 31 January 1966, any of the non-regional countries listed in

Part B (1) of this Annex may increase the amount of its subscription by so informing the Executive Secretary of the United Nations Economic Commis- sion for Asia and the Far East in Bangkok, provided, however, that the total amount of the initial subscriptions of the non-regional countries listed in

Part B (I) and (II) of this Annex shall not exceed the amount of three hundred and fifty million dollars ($350,000,000).

increases in the

United Kader, aube electiner Part ill of a el and eat es in the lo scriptions of Afghanistan,

cambodia, Repuolic or Viet-Nam and Singapore, and tbe admi

ion or indonesia and Switzerland to membership, autorized by Resolutions No. l ana No. 1 offbe Board of Governors at its Inaugural Mecting, tbe following is tbe list of subcriptions with effect from S1 December 1987:
SUBSCRIPTIONS TO THE AUTHORIZED CAPITAL STOCK

OF THE ASIAN DEVELOPMENT BANK

as of 31 December 1967

Part A. Regional Countries

Part

B.

Non-Regional

COUNTRY

L. AFGHANISTAN

2. AUSTRALIA

J. CAMBODIA

4. CEYLON

1. CHINA, REPUBLIC OF

6. INDIA

7. INDONESIA

& JAPAN

9. KOREA, REPUBLIC OF

10. LA05

17. MALAYSIA

NEPAL

NEW

ZEALAND

PAKISTAN

PHICIPPINES

REPUBLIC OF

VIET-NAM

SINGAPORE

THAILAND

FESTERN SAMOA

TOTAL

Amoner of

Subscription

On million dollars)

COUNTRY

& AUSTRIA

2. BELGIUM

3. CANADA

4. DENMARK

%. FINZAND

6 GERMANY. FEDERAL

REPUBLIC OF

7. ITALY

I NETHERLANDS

• NORTAT

JO. SI EDEN

IT. SWITZERLAND

IN UNITED KINGDOM

IS. UNITED STATES

TOTAL

1.00 3.00 21.00 5.00 5.00

U4000

20.00 11.00 5.00

5.90 3.00

10.00 200.00 359.00.

570.00
ANNEX B

ELECTION OF DIRECTORS

SECTION A.-Election of Directors by Governors representing regional members.

Each Governor representing a regional member shall cast all vot

• the member he represents for a single persoi

2. The seven (7) persons receiving the highest number of votes shall be

Directors, except that no person who receives less than ten (10) per cent of the total voting power of regional members shall be considered as elected.

3. If seven (7) persons are not elected at the first ballot, a second bal- lot shall be held in which the person who received the lowest number of votes in the preceding ballot shall be ineligible and in which votes shall be cast ouly by:

a Governors who voted in the preceding ballot for a person who or elected: an (b) Governors whose votes for a person who is elected are deemed, in accordance with paragraph (4) of this Section, to have raised the votes cast for that person above eleven 11) per cent of the total voting power of regional members.

4. (a) In determining whether the votes cast by a Governor shall be deemed to have raised the total number of votes for any person above eleven (I1) per cent, the said eleven (11) per cent shall be deemed to include, first, the votes of the Governor casting the highest number of votes for that person, and then, in diminishing order, the votes of each Governor casting the next highest number until eleven (11) percent is attained.

(b) Any Governor, part of whose votes must be counted in order to raise the Votes cast for any person above ton (10) per cont, shall be considered as casting all his votes for that person even if the total number of votes cast for that person thereby exceeds eleven (Il) percent.

5. If, after the second ballot, seven (7) persons are not elected, further ballots shall be held in conformity with the principles and procedures laid down in this Section, except that after six (6) persons are elected, the seventh may be elected - notwithstanding the provisions of paragraph (2) of this

Section - by a simple majority of the remaining votes of regional members.

All such remaining votes shall be deered to have counted towards the election of the seventh Director.

6. In case of an increase in the number of Directors to be elected by

Governors representing regional members, the minimum and maximum per- ex ages be ending austed by the Board of Governor

and 4 ot Section A of this Ar

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SECTION B.-Election of Directors by Governors representing non-regional members.

Machovernor representing neginal member shall cast ve the member he represents for a single persor

2. The three (3) persons receiving the highest number of votes shall be rectors, except that no person who receives less than twenty-five 25) D ent ot the total voting power of non-regional members shall be considere as elected.

it three (8) persons are not elected at the first ballo hall be held in which the person who raceived the lowest niber dete in the preceding ballot shall be ineligible and in which votes shall be cast only by:

(a) Governors who voted in the preceding ballot for a person who is not elected; and (b) Governors whose votes for a person who is elected are deemed, in accordance with paragraph (4) of this Section, to have raised the votes cast for that person above twenty-six (20) per cent ot the total voting power of non-regional members.

(a) In determining whether the votes cast by a Governor shall be deemed to have raised the total number of votes for any person above twen- ty-six (26) per cent, the said twenty-six (26) per cent shall be deemed to in- clude, first, the votes of the Governor casting the highest number of votes for that person, and then, in diminishing order, the votes of each Governor casting the next highest number until twenty-six (26) percent is attained.

(b) Any Governor, part of whose votes must be counted in order to raise the votes cast for any person above twenty-five (25) per cent, shall be considered as casting all his votes for that person even if the total number of votes cast for that person thereby exceeds twenty-six (26) per cent.

5. If, after the second ballot, three (3) persons are not elected, further ballots shall be held in conformity with the principles and procedures laid down in this Section, except that after two (2) persons are elected, a third may be elected - provided that subscriptions from non-regional members shall have reached a minimum total of three hundred forty-five million dollars ($345,000,000) and notwithstanding the provisions of paragraph (2) of this

Section — by a simple majority of the remaining votes. All such remaining votes shall be deemed to have counted towards the election of the third Direc- tor.

6. In case of an increase in the number of Directors to be elected by

Governors representing non-regional members, the minimum and maximum percentages specified in paragraphs (2), (3) and (4) of Section B of this

Annex shall be correspondingly adjusted by the Board of Governors.

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