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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.cralaw 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.cralaw
Sec. 3. This Act shall take effect upon its
approval. Approved: August 23, 1956 APPENDIX "A" 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 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.cralaw The Corporation shall be guided in all its decisions by the provisions of this Article.cralaw ARTICLE II 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.cralaw
Sec. 2. Capital Stock. — (a) The authorized
capital stock of the Corporation shall be $100,000,000, in terms of
United States dollars.cralaw Sec. 3. Subscriptions. — (a) Each original member
shall subscribe to the number of shares of stock set forth opposite its
name in Schedule A. The number of shares of stock to be subscribed by
other members shall be determined by the Corporation. Sec. 4. Limitation on Liability. — No member shall be liable, by reason of its membership, for obligations of the Corporation.cralaw
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.cralaw ARTICLE III 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.cralaw
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. 5. Applicability of Certain Foreign Exchange Restrictions. — Funds received by or payable to the Corporation in respect of an investment of the Corporation made in any member's territories pursuant to Section 1 of this Article shall not be free, solely by reason of any provision of this Agreement, from generally applicable foreign exchange restrictions, regulations and controls in force in the territories of that member.cralaw
Sec. 6. Miscellaneous Operations. — In addition to
the operations specified elsewhere in this Agreement, the Corporation
shall have the power to: Sec. 7. Valuation of Currencies. — Whenever it shall become necessary under this Agreement to value any currency in terms of the value or another currency, such valuation shall be as reasonably determined by the Corporation after consultation with the International Monetary Fund.cralaw 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.cralaw
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.cralaw ARTICLE IV 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.cralaw
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.cralaw
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.cralaw Sec. 6. Relationship to the Bank. — (a) The
Corporation shall be an entity separate and distinct from the Bank and
the funds of the Corporation shall be kept separate and apart from
those of the Bank. The Corporation shall not lend to or borrow from the
Bank. The provisions of this Section shall not prevent the Corporation
from making arrangements with the Bank regarding facilities, personnel
and services and arrangements for reimbursements of administrative
expenses paid in the first instance by either organization on behalf of
the other.cralaw 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.cralaw 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.cralaw 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.cralaw 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.cralaw
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.cralaw
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.cralaw ARTICLE V 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.cralaw
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.cralaw
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).cralaw
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 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.cralaw
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.cralaw 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. 5. Immunity of Archives. — The archives of the Corporation shall be inviolable.cralaw 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.cralaw 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. 8. Immunities and Privileges of Officers and
Employees. — All Governors, Directors, Alternates, officers and
employees of the Corporation:
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.cralaw 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.cralaw
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.cralaw ARTICLE VII (a) This Agreement may be amended by vote of three-fifths of the Governors exercising four-fifths of the total voting power.cralaw (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.cralaw (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 (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).cralaw (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.cralaw (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 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.cralaw
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.cralaw
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.cralaw ARTICLE I 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.cralaw 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.cralaw 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.cralaw ARTICLE II 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.cralaw
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.cralaw
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).cralaw ARTICLE III 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.cralaw Sec. 3. Operational Principles. — This section
states in general terms the principles which will govern the
Corporation's operations.cralaw 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.cralaw 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. 6. Miscellaneous Operations. — This section
constitutes the Corporation's authorization to engage in various
miscellaneous operations which may prove necessary or desirable for the
achievement of the Corporation's purposes. Although the activities thus
authorized include the issuance of the Corporation's own obligations,
it is not expected that the Corporation will have occasion to engage in
borrowing operations in the early years of its operations.cralaw Sec. 7. Valuation of Currencies. — The authority provided by this section is likely to be important, if at all, primarily in cases of withdrawal or in the event of liquidation of the Corporation, and then only where no official par value exists or where the official par value appears unrealistic. It is expected that the Corporation, before making any determination under this section, would in practice consult with the member or members concerned as well as with the International Monetary Fund.cralaw 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. Sec. 9. Political Activity Prohibited. — This
section is the same as the corresponding section of the Bank's Articles
(Art. IV, Section 10).cralaw ARTICLE IV 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).cralaw Sec. 3. Voting. — The voting provisions are the same as those contained in the Bank's Articles (Art. V, Sec. 3).cralaw
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. 5. Chairman, President and Staff . — Under
this section, the President of the Bank serves as Chairman of the Board
of Directors of the Corporation. There is provision for a separate
President who will be the chief of the operating staff of the
Corporation but who will serve under the general supervision of the
Chairman. This arrangement is designed to assure consistency between
the operations of the Bank and those of the Corporation, while at the
same time permitting the Corporation to have a separate management with
sufficient status and power to enable it to operate effectively. Except
for the differences necessary to permit this arrangement, this section
is substantially the same as the corresponding section of the Bank's
Articles (Art. V, Sec. 5).cralaw Sec. 6. Relationship to the Bank. — It is contemplated that, at least in the early stages of operations, the Corporation will make extensive use of the professional and administrative services and personnel of the Bank. To this end, it is expected that the Bank and the Corporation will enter into cooperative arrangements under which the Corporation will reimburse the Bank for the cost of services provided to it by the Bank. Apart from arrangements of this type, however, the Corporation will be required, as provided by this section, to keep its funds separate and distinct from those of the Bank and to refrain from looking to the Bank for any financing.cralaw 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. 8. Location of Office. — The provision that the principal office of the Corporation shall be in the same locality as the principal office of the Bank reflects the concept of the Corporation as an affiliate of the Bank. The provision with respect to other offices corresponds generally with the provision in the Bank's Articles concerning agencies or branch offices (Art. V, Sec. 9 [b]); it has appeared unnecessary to include any provision for regional offices comparable to that of the Bank's Articles (Art. V, Section 10).cralaw Sec. 9. Depositories. — This section adapts for purposes of the Corporation the corresponding provision of the Bank's Articles (Art. V, Section 11).cralaw Section 10. Channel of Communication. — This section is included for purposes of administrative convenience.cralaw 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." Section 12. Dividends. — Paragraph (a) differs from
the corresponding provision in the Bank's Articles (Art. V, Section 14
(a) by explicitly authorizing the distribution of dividends out of
surplus as well as out of net income and by omitting any requirement
for an annual determination as to such distribution. Paragraph (b),
providing for pro rata distribution of dividends to all members,
necessarily differs from the provisions regarding dividends in the
Bank's Articles (Art. V, Section 14 (b)) because of the differences
with respect to members obligations on their capital subscriptions. It
is expected that the Corporation will normally wish to pay dividends in
convertible currencies. ARTICLE V 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).cralaw 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.cralaw 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.cralaw
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 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.cralaw 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.cralaw (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)).cralaw 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 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.cralaw ARTICLE VIII This Article is substantially the same as Article IX of the Bank's Articles.cralaw ARTICLE IX 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.cralaw 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. |