PHILIPPINE LAWS, STATUTES, CODES & ISSUANCES
PHILIPPINE LAWS, STATUTES AND CODES
REPUBLIC ACTS
REPUBLIC ACT NO. 1604 - AN
ACT AUTHORIZING PHILIPPINE MEMBERSHIP IN THE PROPOSED INTERNATIONAL
FINANCE CORPORATION AND AUTHORIZING THE APPROPRIATION OF FUNDS THEREFOR |
WHEREAS, the Executive Directors of
the International Bank for Reconstruction and Development have
approved, for submission to member governments, the articles of
agreement of the proposed International Finance Corporation, appended
hereto and made an integral part hereof as Appendix A; WHEREAS, in association with private investors, the proposed International Finance Corporation will assist in financing the establishment, improvement and expansion of productive private enterprises which would contribute to the development of its member countries by making investments, without guarantee of repayment by the member governments concerned, in cases where sufficient private capital is not available on reasonable terms; WHEREAS, it is to the economic interest of the Republic of the Philippines to become a member of the proposed International Finance Corporation: Now, therefore Section 1. The President of the Philippines or his representative is hereby authorized to sign, on behalf of the Government of the Republic of the Philippines, the Articles of Agreement of the International Finance Corporation. Sec. 2. There is hereby authorized to be appropriated the sum of three hundred thirty-two thousand (P332,000.00) pesos to pay for the subscription of the Government of the Republic of the Philippines to the capital stock of the proposed International Finance Corporation.
Sec. 3. This Act shall take effect upon its
approval. Approved: August 23, 1956 APPENDIX "A"
ARTICLES OF AGREEMENT OF THE INTERNATIONAL FINANCE CORPORATION The Governments on whose behalf of this Agreement is signed agree as follows: INTRODUCTORY ARTICLE
The International Finance Corporation (hereinafter called the Corporation) is established and shall operate in accordance with the following provisions: ARTICLE I
Purpose The purpose of the Corporation is to further economic development by encouraging the growth of productive private enterprise in member countries, particularly in the less developed areas, thus supplementing the activities of the International Bank for Reconstruction and Development (hereinafter called the Bank). In carrying out this purpose, the Corporation shall: (i) in association with private investors, assist in financing the establishment, improvement and expansion of productive private enterprises which would contribute to the development of its member countries by making investments, without guarantee of repayment by the member government concerned, in cases where sufficient private capital is not available on reasonable terms; (ii) seek to bring together investment opportunities, domestic and foreign private capital, and experienced management; and (iii) seek to stimulate, and to help create conditions conducive to, the flow of private capital, domestic and foreign, into productive investment in member countries. The Corporation shall be guided in all its decisions by the provisions of this Article. ARTICLE II
Membership and Capital Section 1. Membership. � (a) The original members of the Corporation shall be those members of the Bank listed in Schedule A hereto which shall, on or before the date specified in Article IX, Sec. 2 (c), accept membership in the Corporation. (b) Membership shall be open to other members of the Bank at such times and in accordance with such terms as may be prescribed by the Corporation.
Sec. 2. Capital Stock. � (a) The authorized
capital stock of the Corporation shall be $100,000,000, in terms of
United States dollars. Sec. 4. Limitation on Liability. � No member shall be liable, by reason of its membership, for obligations of the Corporation.
Sec. 5. Restriction on Transfers and Pledges of
Shares. � Shares of stock shall not be pledged or encumbered in any
manner whatever, and shall be transferable only to the Corporation. ARTICLE III
Operations Section 1. Financing Operations. � The Corporation may make investments of its funds in productive private enterprises in the territories of its members. The existence of a government or other public interest in such an enterprise shall not necessarily preclude the Corporation from making an investment therein. Sec. 2. Forms of Financing. � (a) The Corporation's financing shall not take the form of investments in capital stock. Subject to the foregoing, the Corporation may make investments of its funds in such form or forms as it may deem appropriate in the circumstances, including (but without limitation) investments according to the holder thereof the right to participate in earnings and the right to subscribe to, or to convert the investment into, capital stock. (b) The Corporation shall not itself exercise any right to subscribe to, or to convert any investment into, capital stock.
Sec. 3. Operational Principles. � The operations
of the Corporation shall be conducted in accordance with the following
principles:
Sec. 4. Projection of interests. � Nothing in this
Agreement shall prevent the Corporation, in the event of actual or
threatened default on any of its investments, actual or threatened
insolvency of the enterprise in which such investment shall have been
made, or other situations which, in the opinion of the Corporation,
threaten to jeopardize such investment, from taking such action and
exercising such rights as it may deem necessary for the protection of
its interests.
Sec. 6. Miscellaneous Operations. � In addition to
the operations specified elsewhere in this Agreement, the Corporation
shall have the power to: Sec. 8. Warning To Be Placed on Securities. � Every security issued or guaranteed by the Corporation shall bear on its face a conspicuous statement to the effect that it is not an obligation of the Bank or, unless expressly stated on the security, of any government.
Sec. 9. Political Activity Prohibited. � The
Corporation and its officers 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 or members concerned. Only
economic considerations shall be relevant to their decisions, and these
considerations shall be weighed impartially in order to achieve the
purposes stated in this Agreement. ARTICLE IV
Organization and Management Section 1. Structure of the Corporation. � The Corporation shall have a Board of Governors, a Board of Directors, a Chairman of the Board of Directors, a President and such other officers and staff to perform such duties as the Corporation may determine.
Sec. 2. Board of Governors. � (a) All the powers
of the Corporation shall be vested in the Board of Governors.
Sec. 3. Voting. � (a) Each member shall have two
hundred fifty votes plus one additional vote for each share of stock
held.
Sec. 4. Board of Directors. � (a) The Board of
Directors shall be responsible for the conduct of the general
operations of the Corporation, and for this purpose shall exercise all
the powers given to it by this Agreement or delegated to it by the
Board of Governors.
Sec. 5. Chairman, President and Staff . � (a) The
President of the Bank shall be ex officio Chairman of the Board of
Directors of the Corporation, but shall have no vote except a deciding
vote in case of an equal division. He may participate in meeting of the
Board of Governors but shall not vote at such meetings. Sec. 7. Relations With Other International Organizations. � The Corporation, acting through the Bank, shall enter into formal arrangements with the United Nations and may enter into such arrangements with other public international organizations having specialized responsibilities in related fields. Sec. 8. Location of Offices. � The principal office of the Corporation shall be in the same locality as the principal office of the Bank. The Corporation may establish other offices in the territories of any member. Sec. 9. Depositories. � Each member shall designate its central bank as a depository in which the Corporation may keep holdings of such member's currency or other assets of the Corporation or, if it has no central bank, it shall designate for such purpose such other institution as may be acceptable to the Corporation. Section 10. Channel of Communications. � Each member shall designate an appropriate authority with which the Corporation may communicate in connection with any matter arising under this Agreement.
Section 11. Publication of Reports and Provision of
Information. � (a) The Corporation shall publish an annual report
containing an audited statement of its accounts and shall circulate to
members at appropriate intervals a summary statement of its financial
position and a profit and loss statement showing the results of its
operations.
Section 12. Dividends. � (a) The Board of Governors
may determine from time to time what part of the Corporation's net
income and surplus, after making appropriate provision for reserves,
shall be distributed as dividends. ARTICLE V
Withdrawal; Suspension of Membership; Suspension of Operations Section 1. Withdrawal by Members. � Any member may withdraw from membership in the Corporation at any time by transmitting a notice in writing to the Corporation at its principal office. Withdrawal shall become effective upon the date such notice is received.
Sec. 2. Suspension of Membership. � (a) If a
member fails to fulfill any of its obligations to the Corporation, the
Corporation may suspend its membership by decision of a majority of the
Governors, exercising a majority of the total voting power. The member
so suspended shall automatically cease to be a member one year from the
date of its suspension unless a decision is taken by the same majority
to restore the member to good standing. Sec. 3. Suspension or Cessation of Membership in the Bank. � Any member which is suspended from membership in, or ceases to be a member of, the Bank shall automatically be suspended from membership in, or cease to be a member of, the Corporation, as the case may be.
Sec. 4. Rights and Duties of Governments Ceasing
to Be Members. � (a) When a government ceases to be a member it shall
remain liable for all amounts due from it to the Corporation. The
Corporation shall arrange for the repurchase of such government's
capital stock as a part of the settlement of accounts with it in
accordance with the provisions of this Section, but the government
shall have no other rights under this Agreement except as provided in
this Section and in Article VIII (c).
Sec. 5. Suspension of Operations and Settlement of
Obligations. � (a) The Corporation may permanently suspend its
operation by vote of a majority of the Governors exercising a majority
of the total voting power. After such suspension of operations the
Corporation shall forthwith cease all activities, except those incident
to the orderly realization, conservation and preservation of its assets
and settlements of its obligations. Until final settlement of such
obligations and distribution of such assets, the Corporation shall
remain in existence and all mutual rights and obligations of the
Corporation and its members under this Agreement shall continue
unimpaired, except that no member shall be suspended or withdraw and
that no distribution shall be made to members except as in this Section
provided. ARTICLE VI
Status, Immunities and Privileges Section 1. Purposes of Article. � To enable the Corporation to fulfill the functions with which it is entrusted, the status, immunities and privileges set forth in this Article shall be accorded to the Corporation in the territories of each member.
Sec. 2. Status of the Corporation. � The
Corporation shall possess full juridical personality and, in
particular, the capacity: Sec. 3. Position of the Corporation with Regard to Judicial Process. � Actions may be brought against the Corporation only in a court of competent jurisdiction in the territories of a member in which the Corporation has an office, has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities. No actions shall, however, be brought by members or persons acting for or deriving claims from members. The property and assets of the Corporation shall, wheresoever located and by whomsoever held, be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Corporation.
Sec. 4. Immunity of Assets from Seizures. �
Property and assets of the Corporation, wherever located and by
whomsoever held, shall be immune from research, requisition,
confiscation, expropriation or any other form of seizure by executive
or legislative action. Sec. 6. Freedom of Assets from Restrictions. � To the extent necessary to carry out the operations provided for in this Agreement and subject to the provisions of Article III, Sec. 5, and the other provisions of this Agreement, all property and assets of the Corporation shall be free from restrictions, regulations, controls and moratoria of any nature.
Sec. 7. Privilege for Communications. � The
official communications of the Corporation shall be accorded by each
member the same treatment that it accords to the official
communications of other members.
Sec. 9. Immunities from Taxation. � (a) The
Corporation, its assets, property, income and its operations and
transactions authorized by this Agreement, shall be immune from all
taxation and from all customs duties. The Corporation shall also be
immune from liability for the collection or payment of any tax or duty. Section 10. Application of Article. � Each member shall take such action as is necessary in its own territories for the purpose of making effective in terms of its own law the principles set forth in this Article and shall inform the Corporation of the detailed action which it has taken.
Section 11. Waiver. � The Corporation in its
discretion may waive any of the privileges and immunities conferred
under this Article to such extent and upon such conditions as it may
determine. ARTICLE VII
Amendments (a) This Agreement may be amended by vote of three-fifths of the Governors exercising four-fifths of the total voting power. (b) Notwithstanding paragraph (a) above, the affirmative vote of all Governors is required in the case of any amendment modifying: (i) the right to withdraw from the Corporation provided in Article V, Section 1; (ii) the pre-emptive right secured by Article II, Sec. 2 (d); (iii) the limitation on liability provided in Article II, Sec. 4. (c) Any proposal to amend this Agreement, whether emanating from a member, a Governor or the Board of Directors, shall be communicated to the Chairman of the Board of Governors who shall bring the proposal before the Board of Governors. When an amendment has been duly adopted, the Corporation shall also certify by formal communication addressed to all members. Amendments shall enter into force for all members three months after the date of the formal communication unless the Board of Governors shall specify a shorter period. ARTICLE VIII
Interpretation and Arbitration (a) Any question of interpretation of the provisions of this Agreement arising between any member and the Corporation or between any members of the Corporation shall be submitted to the Board of Directors for its decision. If the question particularly affects any member of the Corporation not entitled to appoint an Executive Director of the Bank, it shall be entitled to representation in accordance with Article IV, Sec. 4 (g). (b) In any case where the Board of Directors has given a decision under (a) above, any member may require that the question be referred to the Board of Governors, whose decision shall be final. Pending the result of the reference to the Board of Governors, the Corporation may, so far as it deems necessary, act on the basis of the decision of the Board of Directors. (c) Whenever a disagreement arises between the Corporation and a country which has ceased to be a member, or between the Corporation and any member during the permanent suspension of the Corporation, such disagreement shall be submitted to arbitration by a tribunal of three arbitrators, one appointed by the Corporation, another by the country involved and an umpire who, unless the parties otherwise agree, shall be appointed by the President of the International Court of Justice or such other authority as may have been prescribed by regulation adopted by the Corporation. The umpire shall have full power to settle all questions of procedure in any case where the parties are in disagreement with respect thereto. ARTICLE IX
Final Provisions Section 1. Entry into Force. � This Agreement shall enter into force when it has been signed on behalf of not less than 30 governments whose subscription comprise not less than 75 per cent of the total subscription set forth in Schedule A and when the instruments referred to in Sec. 2 (a) of this Article have been deposited on their behalf, but in no event shall this Agreement enter into force before October 1, 1955.
Sec. 2. Signature. � (a) Each government on whose
behalf this Agreement is signed shall deposit with the Bank an
instrument setting forth that it has accepted this Agreement without
reservation in accordance with its law and has taken all steps
necessary to enable it to carry out all of its obligations under this
Agreement.
Sec. 3. Inauguration of the Corporation. � (a) As
soon as this Agreement enters into force under Section I of this
Article the Chairman of the Board of Directors shall call a meeting of
the Board of Directors. ARTICLE I
Purpose This Article makes clear the Corporation's essential function is to assist in the economic development of its member countries by promoting the growth of the private sector of their economics. It also makes plain that, in carrying out this function, the Corporation is to supplement and assist the investment of private capital and not to compete with such capital. The charter, it should be noted, does not exclude any member country from the scope of the Corporation's operations; Article I, however, emphasizes the character of the Corporation as a developmental agency intended to operate particularly in the less developed areas. While it is not envisaged that the Corporation will select the enterprises in which it invests on the basis of their relative economic priority, Article I indicates that the Corporation is intended to finance only enterprises which are productive in the sense of contributing to the development of the economics of the member countries in which they operate. The charter does not explicitly require that the private investors with which the Corporation is to associate itself must invest new capital in the enterprise concurrently with the Corporation's investment. It is expected, however, that as a general rule the Corporation will undertake financing only where new private capital is invested in the enterprise at or around the same time. ARTICLE II
Membership and Capital Section 1. Membership. � This section follows, in substance, the comparable provision in the Bank's Articles (Art. II, Section 1), except that it is membership in the Bank rather than in the International Monetary Fund that it is expressed as the precondition to membership in the Corporation. Sec. 2. Capital Stock. � This section expresses the capital stock in terms of United States dollars, rather than gold dollars as in the case of the Bank's Articles (Art. II, Sec. 2. (a)). Since the charter, unlike the Bank's Articles, contains no maintenance of value provision and nothing approximating the 80% liability on stock subscriptions, it has not appeared necessary to express the capital stock in terms of gold dollars. The entire authorized capital stock of the Corporation ($100,000,000) is reserved, in the first instance, for subscription by original members. If all members of the Bank listed in Schedule A accept membership in the Corporation, the entire authorized capital stock will be subscribed, leaving none to be issued to new members. This contrasts with the arrangements made in the case of the Banks, where only about 90 per cent of the authorized capital stock was reserved for subscription by original members and about 10 per cent was thus available for new members. For this reason, provision is made in paragraph (c) (i) for increasing the capital stock for initial subscription by new members by not more than 10 per cent (10,000 shares), without being subject either to the three-fourths majority vote requirement (paragraph (c) (ii) or the pre-emptive right requirement (paragraph (d), both of which apply to other increases of capital stock, as in the case of the Bank (Art. II, Secs. 2 (b) and 3 (c)).
Sec. 3. Subscriptions. � Under this section and
Schedule A, the initial subscription of each original member is
proportionate to its subscription to the capital stock of the Bank.
Thus, if all of the members of the Bank join the Corporation as
original members, each members will have the same proportion of the
Corporation's capital stock as of the Bank's capital stock. On the
other hand, the failure of any member of the Bank to join the
Corporation will not affect the amount of the subscription of any other
member. Sec. 4. Limitation on Liability. � This section adapts for purposes of the Corporation the provision contained in Article II, Sec. 6, of the bank's Articles.
Sec. 5. Restriction on Transfer and Pledges of
Shares. � This section is the same in substance as the comparable
provision of the Bank's Articles (Art. II, Section 10). ARTICLE III
Operations Section 1. Financing Operations. � This section authorizes the Corporation to invest in private productive enterprises in the territories of its members. While it is anticipated that the major emphasis in the Corporation's financing will be on industrial enterprises, the Corporation may also invest in agricultural, financial, commercial or other business ventures. For purposes of deciding whether an enterprise is in the territories of a member, formal considerations such as legal corporate domicile are not intended to be controlling. It is rather the intention that the determining factors should be such matters as the physical location of any plants and the place where the investment has its direct economic impact. Sec. 2. Forms of Financing. � This section gives the Corporation authority to make investments in any form or forms it considers appropriate in the circumstances, subject to the single restriction that it may not invest in capital stock, common or preferred. Apart from this restriction, the Corporation is intended to have latitude to tailor each investment to meet the requirements of the particular case, including the type of enterprise being financed, its financial situation and the applicable local laws. It is expected that the Corporation will utilize this broad grant of authority to make investments on terms providing for financial returns appropriate to the risks undertaken. For example, in situations in which private investors would normally insist on an equity participation, the Corporation may reasonably be expected to require a participation in the profits of the enterprise financed and a right, exercisable by any purchaser of the investment, to subscribe to, or to convert the investment into, capital stock. In determining the form of each investment, the Corporation will presumably wish to bear in mind its interest both in the success of the venture financed and in having an investment portfolio attractive to private investors. Sec. 3. Operational Principles. � This section states in general terms the principles which will govern the Corporation's operations. Of particular importance are the injunction to the Corporation (subpara. [i] not undertake any financing for which in its opinion sufficient private capitals could be obtained on reasonable terms; the prohibition (subpara. [iv] against the assumption of responsibility for managing enterprises in which the Corporation has invested; and the requirement (subpara. [vi],) that the Corporation shall seek to revolve its funds by selling its investments to private investors whenever it can appropriately do so on satisfactory terms. Subparagraph (ii) provides an assurance to members that the Corporation will not invest in any enterprise if the member concerned objects to the proposed financing. The Corporation will make appropriate arrangements to notify any member government desiring such notification of any contemplated financing in the territories of that member. It should be noted, however, that nothing in the Agreement requires the Corporation to obtain any affirmative governmental approval before making an investment. Subparagraph (iii) is substantially the same as the corresponding provision of the Bank's Articles (Art. III, Secs 5 [a]). Subparagraph (v) sets forth the principal considerations which the Corporation is to take into account in deciding upon terms and conditions for its investments. Subparagraph (vii) enjoins the Corporation to seek a diversified investment portfolio; it is expected that in practice this diversification will be both geographical and as among types of undertakings. In connection with the provision that the Corporation seek to revolve its funds (subpara. [vi], it has seemed desirable to avoid writing into the charter any requirement that preference to be given to any particular class or classes of purchasers. However, the Corporation may often find it necessary or appropriate, when making an investment, to give to private investors with which it is associated in the enterprise a first refusal to purchase the Corporation's interest therein. Moreover, if the Corporation has various opportunities of selling an investment on roughly the same terms, it will presumably bear in mind in deciding among them the desirability of fostering local capital markets. It is expected that the operational principles set forth in the charter will be supplemented by a more detailed and comprehensive statement of operating policies to be adopted by the Board of Directors of the Corporation. This statement of policies will presumably cover, among other things, the extent to which the Corporation will be expected to go to satisfy itself that the funds which its invests are used efficiently and economically and, where such funds are used for the purchase of goods, that the goods are bought on reasonable terms and in favorable markets. Sec. 4. Protection of Interests. � This section authorizes the Corporation, notwithstanding any other provision of the charter, to take appropriate action to protect its interests in any situation which, in its judgment, threatens to jeopardize its investment. The otherwise applicable limitations on the Corporation's power to acquire capital stock and to undertake management responsibility, for example, would not prevent it from exercising such powers should such a situation of jeopardy arise.
Sec. 5. Applicability of Certain Foreign Exchange
Restrictions. � The purpose of this section is to put the Corporation
as nearly as possible in the same position as private investors
generally with respect to foreign exchange restrictions, regulations
and controls imposed by the country of investment. It should be noted
that nothing in the charter precludes the Corporation from negotiating
with the government concerned, like any private investor, for
appropriate arrangement regarding transfer of income and of return of
principal on its investment.
Sec. 8. Warning to be Placed on Securities. � This
section adds to the provisions of the corresponding section of the
Bank's Articles (Art. IV, Sec 9) the requirement that any security
issued or guaranteed by the Corporation shall also bear on its face a
statement that it is not an obligation of the Bank. ARTICLE IV
Organization and Management Section 1. Structure of the Corporation. � This provision is substantially the same as the comparable provision of the Bank's Articles (Art. V. Section 1), except that it includes a reference to a Chairman of the Director as well as to a President. As explained below in connection with Sec. 5, it is envisaged that the Corporation, unlike the Bank, will have different persons serving as Chairman and as President. Apart from this distinction, the overall organizational structure of the Corporation is designed to be the same as that of the Bank, thus enabling the Corporation to take advantage of the pattern of relationships already established by the Bank. Sec. 2. Board of Governors. � This section gives the Corporation's Board of Governors the same broad grant of powers, and the same general authority to delegate those powers to the Directors, as is given to the Bank's Board of Governors by the Bank's Articles (Art. V, Sec. 2). The same powers reserved to the Board of Governors of the Bank are also reserved to the Board of Governors of the Corporation, except that the nondelegable powers include power to declare dividends (instead of power to determine the distribution of net income) and there has been added a new provision, the power to amend the charter (see discussion under Article VII below). The provisions that members of the Corporation shall be represented by the same Governor and Alternate Governor on the Boards of Governors of the Bank and the Corporation, and that the annual meeting of the Corporation's Board of Governors shall be held in conjunction with the annual meeting of the Board of Governors of the Bank, are designed to emphasize the affiliation between the Bank and the Corporation and to keep the expenses of the Corporation's annual meeting to a minimum. Because of the size of the Corporation, there has been omitted as inappropriate and unnecessary any requirement comparable to the one contained in Article V, Sec. 2 (c), of the Bank's Articles that meetings of the Board of Governors shall be called whenever requested by five members or by members having one-quarter of the total voting power. Although, as in the case of the Bank, the charter provides that the Governors and Alternate Governors shall serve without compensation, it is expected that the by-laws will authorize the Corporation to reimburse them for expenses incurred in attending meetings of the Corporation's Board of Governors over and above those which they would in any event have incurred in attending meetings of the Bank's Board of Governors. For this reason, no provision for reimbursement of expenses is included in the charter. Sec. 3. Voting. � The voting provisions are the same as those contained in the Bank's Articles (Art. V, Sec. 3).
Sec. 4. Board of Directors. � The provisions
relating to the Board of Directors are, except as noted below,
substantially the same as those relating to the Executive Directors in
the Bank's Article (Art. V, Sec. 4). The major difference is that
instead of the provisions contained in the Banks Articles for the
appointment and election of Executive Directors, the charter provides
that the Bank's Executive Directors and Alternates shall serve as ex
officio in a corresponding capacity for the Corporation, provided they
represent at least one country which is a member of the Corporation.
This arrangement is proposed as an effective and economical method of
achieving the desired affiliation and coordination of the Bank and the
Corporation. The only other substantive changes are the omission as
inappropriate of any requirement that the Directors shall function in
continuous session and the omission as unnecessary of the authority of
the Directors to appoint committees.
Sec. 7. Relations with Other International
Organizations. � This section expresses the policy that the
Corporation, acting through the Bank, shall enter into formal
arrangements with the United Nations and may establish such
arrangements with other specialized agencies. Sec. 9. Depositories. � This section adapts for purposes of the Corporation the corresponding provision of the Bank's Articles (Art. V, Section 11). Section 10. Channel of Communication. � This section is included for purposes of administrative convenience.
Section 11. Publication of Reports and Provision of
Information. � This section contains the same provisions as the
corresponding section of the Bank's Articles (Art. V, Section 13)
except that the Corporation is required to circulate a summary
statement of its financial position and a profit and loss statement at
"appropriate intervals" rather than at "intervals of three months or
less." ARTICLE V
Withdrawal; Suspension of Membership Suspension of Operations Section 1. Withdrawal by Members. � Sec. 2. Suspension of Membership. � These sections are the same as the corresponding provisions in the Bank's Articles (Art. VI, Secs. 1, 2). Sec. 3. Suspension or Cessation of Membership in the Bank. � This section is comparable to the provision of the Bank's Articles (Art. VI. Sec. 3) that any member which ceases to be a member of the International Monetary Fund shall cease to be a member of the Bank; the section does not, however, contain any provision for continuance of membership by a three-fourths vote. It should be noted that suspension from or cessation of membership in the Corporation would have no effect on the member's status in the Bank. Sec. 4. Rights and Duties of Governments Ceasing to be Members. � This section establishes a somewhat different and simpler procedure than is contained in the Bank's Articles (Art. VI, Sec. 4) for settling accounts with governments ceasing to be members. The principal changes have been prompted partly by the differences in the nature of the capital structure of the Bank and the Corporation and partly by the Bank's own experience. One important change is that the Charter expressly authorizes the Corporation to negotiate an agreement with the government which ceases to be a member which provide not only for the repurchase of the government's stock on appropriate terms but also for a final settlement of all obligations of the government to the Corporation. In the absence of such an agreement, the procedure to be followed is generally the same as that provided for by the Bank's Articles except that the Corporation is given the right to determine the currency of payment.
Sec. 5. Suspension of Operations and Settlement of
Obligations. � This section is similar to the corresponding section of
the Bank's Articles (Art. VI, Sec. 5), except that it has been
simplified by consolidating some of the provisions for the protection
of creditors and by giving the Corporation more latitude than has been
given to the Bank to determine the form of distributions. ARTICLE VI
Status, Immunities and Privileges The privileges and immunities set forth in this Article are conferred upon the Corporation and not upon enterprises financed by the Corporation. Those enterprises will not enjoy any special status by reason of the Corporation's investments. The entire Article follows precisely Article VII of the Bank's Articles except as follows: (a) Sec. 6, which confers a general immunity from restrictions on assets, is made subject to the provisions of Article III, Sec. 5, which permits the application of foreign exchange restrictions in the country of investment. (See discussion under Article III, Sec. 5, above). (b) A new section (Section 11) has been added, expressly authorizing the Corporation to waive any privilege or immunity conferred by the charter. (c) In view of the general waiver authority contained in Section 11, subparagraph (i) of Sec. 8 omits the specific reference to waiver contained in the Bank's Articles (Art. VII, Sec. 8 (i)). It is expected that the waiver authority will be used by the Corporation in any case where the assertion of an immunity or privilege granted by the charter would give the Corporation an unfair competitive position inconsistent with its objective to encourage private investment and to demonstrate to private investors in capital-exporting countries the attractiveness of returns obtainable from investment in the less developed areas. A special comment should be made regarding Sec. 7, which provides that each communications of the Corporation. A question arose at the International Telecommunication Conference in Buenosres in 1952 as to whether specialized agencies generally should be accorded governmental treatment for their communications and this question is under consideration in the United Nations and the International Telecommunications Union. In view of the close affiliation contemplated between the Bank and the Corporation, it has been deemed desirable to provide in the charter that the Corporation be given the same communication privileges as the Bank. Nevertheless, in the interest of cooperation, it is expected that the Corporation will work out the practical application of this provision in consultation with appropriate authorities of the International Telecommunication Union. ARTICLE VII
Amendments This Article is in substance the same as Article VIII of the Bank's Articles except that, to simplify the amendment procedure, it specifies that approval of amendments is to be by affirmative vote of Governors rather than of both Governors and members. ARTICLE VIII
Interpretation and Arbitration This Article is substantially the same as Article IX of the Bank's Articles. ARTICLE IX
Final Provisions Section 1. Entry into Force. � Under this section acceptance of the charter by not less than 30 governments whose subscriptions amount to not less than 75 percent of the Corporation's total authorized capital is required. In the case of the Bank's Articles (Art. XI, Section 1) the minimum amount required to be subscribed was 65 percent of the total subscriptions set forth in Schedule A to the Bank's Articles; no minimum number of subscribers was prescribed. Sec. 2. Signature. � This section is substantially the same as the corresponding section of the Bank's Articles (Art. XI, Sec. 2), except in the following respects. First, it is the Bank rather than the Government of the United States which is to be the depository of the agreement and to give notice of its entry into force. Second, the charter contains no provision requiring governments to make an initial payment, at the time they sign the agreement, for purposes of the Corporation's administrative expenses. Such minor expenses as may be incurred prior to the time that payment on the subscriptions is made are expected to be borne in the first instance by the Bank, which will thereafter be reimbursed by the Corporation. Third, subparagraphs (h) and (i) of the Bank's Articles have been omitted as inapplicable. As regards the territorial application of the charter, it is understood that references in the charter to the territories of a member include all territories for whose international relations such member is responsible, except those which have been expressly excluded by the government concerned in its instrument of acceptance, and that such exclusion would therefore not be considered to be a reservation within the terms of Article IX, Sec. 2 (a). In view of the foregoing, a provision corresponding to the territorial application clause in the Bank's Articles (Art. XI, Sec. 2 (g), has not been included in the charter. Sec. 3. Inauguration of the Corporation. � Because there is no need to elect Directors for the Corporation, this section sets forth a simpler procedure for inaugurating the Corporation than was possible in the case of the Bank (Art. XI, Sec. 3). The provisions of paragraph (c), authorizing the Board of Directors to exercise all the powers of the Board of Governors (except the nondelegeable) powers) pending the first meeting of the Board of Governors, obviate the need for a meeting of Governors before the Corporation starts operations. |