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20 JUNE 2012. - Act to approve the Treaty establishing the European Stability Mechanism (MES), signed in Brussels on 2 February 2012 (1) (2)

ALBERT II, King of the Belgians,
To all, present and to come, Hi.
The Chambers adopted and We sanction the following:
Article 1^er. This Act regulates a matter referred to in Article 77 of the Constitution.
Art. 2. The Treaty establishing the European Stability Mechanism (MES), signed in Brussels on 2 February 2012, will come out with its full effect.
Art. 3. The decisions of the Board of Governors pursuant to Articles 5, paragraph 6, (m), 11, paragraphs 6, 19 and 44 of the Treaty establishing the European Stability Mechanism (MES), will come out their full and full effect.
Promulgation of this law, let us order that it be clothed with the seal of the State and published by the Belgian Monitor.
Given in Brussels on 20 June 2012.
ALBERT
By the King:
Deputy Prime Minister and Minister of Finance,
S. VANACKERE.
Deputy Prime Minister and Minister for Foreign Affairs,
D. REYNDERS.
The Minister of Budget,
O. CHASTEL
Seal of the state seal:
____
Note
(1) Session 2011-2012.
Senate.
Documents:
Bill tabled on 29 May 2012, No. 5-1598/1.
Report, no. 5-1598/2.
Annales parlementaire
Discussion, meeting of 7 June 2012.
Voting, meeting of 7 June 2012.
Room
Documents:
Project transmitted by the Senate, No. 53-2251/1.
Report made on behalf of the Committee 53-2251/2.
Text adopted in plenary and subject to Royal Assent, No. 53-2251/3.
Annales parlementaire
Discussion, meeting of June 14, 2012.
Vote, meeting of 14 June 2012.

THE REPUBLIC OF GERMANY, THE REPUBLIC OF GERMANY,
THE CONTRACTING PARTIES, the Kingdom of Belgium, the Federal Republic of Germany, the Republic of Estonia, Ireland, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Italian Republic, the Republic of Cyprus, the Grand Duchy of Luxembourg, Malta, the Kingdom of the Netherlands, the Republic of Austria, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic and the Republic of Finland (hereinafter referred to as the Slovak Republic)
DETERMINEES to ensure the financial stability of the euro zone,
RECALLING the conclusions of the European Council of 25 March 2011 on the establishment of a European stability mechanism,
CONSIDERANT CE QUI SUIT :
(1) The European Council agreed on 17 December 2010 that it was necessary for the member states of the euro zone to establish a permanent mechanism for stability. This European stability mechanism ("MES") will assume the role currently assigned to the European Financial Stability Facility ("FESF") and the European Financial Stabilization Mechanism ("MESF") by providing, as far as necessary, financial assistance to the member states of the euro zone.
(2) On 25 March 2011, the European Council adopted Decision 2011/199/EU amending Article 136 of the Treaty on the Functioning of the European Union with regard to a mechanism of stability for the Member States whose currency is the euro (1), adding to Article 136 the following paragraph: "The Member States whose currency is the euro can establish a mechanism of stability that will be activated if it is indispensable to preserve the stability of the euro zone as a whole. The granting of any necessary financial assistance under the mechanism will be subject to strict conditionality."
(3) In order to improve the efficiency of financial assistance and to prevent the risk of financial contagion, the Heads of State or Government of the Member States whose currency is the euro agreed, on 21 July 2011, to "increase [the] flexibility [of the SMEs], with appropriate conditions".
(4) The strict respect for the framework established by the European Union, integrated macroeconomic monitoring, and in particular the stability and growth pact, the macroeconomic imbalances framework and the economic governance rules of the European Union, should remain the first step against the confidence-building crises that affect the stability of the euro zone.
(5) On 9 December 2011, the Heads of State and Government of Member States whose currency is the euro agreed to move towards a stronger economic union comprising a new fiscal pact and an increased coordination of economic policies to be implemented through an international agreement, the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union ("TSCG"). The TSCG will help to develop closer coordination within the euro area in order to ensure a sound and sustainable management of public finances and thus to respond to one of the main sources of financial instability. This Treaty and TSCG are complementary to the promotion of responsible budgetary practices and solidarity within the Economic and Monetary Union. It is recognized and agreed that the provision of financial assistance under the new SEM programs will be conditioned, starting with 1^er March 2013, at the ratification of the TSCG by the Member State concerned and, at the expiry of the time limit referred to in Article 3, paragraph 2, of the TSCG, to the fulfilment of the requirements of that Article.
(6) Given the strong interdependence in the euro zone, the serious risks to the financial stability of Member States whose currency is the euro can compromise the financial stability of the euro zone as a whole. As a result, SMEs can provide, on the basis of a strict conditionality adapted to the financial assistance instrument chosen, support for stability, if it is essential to preserve the financial stability of the euro zone as a whole and its member states. The initial maximum loan capacity of the ESM is set at 500 billion (500.000.000.000) euros, the outstanding support for the stability of the EFSF included. However, the adequacy of the maximum overall volume of loans from SMEs and FSF will be reassessed prior to the entry into force of this Treaty. It shall be increased, if any, by the Board of Governors of the SEM, in accordance with section 10, at the time of the entry into force of this Treaty.
(7) All member States of the euro zone will become members of the ESM. Any Member State of the European Union joining the euro zone should become a member of the ESM with the same full rights and obligations as those of the Contracting Parties.
(8) MES will cooperate very closely with the International Monetary Fund ("IMF") as part of the provision of stability support. Active IMF participation will be sought both technically and financially. It is expected from a Member State in the euro area requesting financial assistance from the ESM that, where possible, it addresses a similar request to the IMF.
(9) The Member States of the European Union whose currency is not the euro (Member States outside the euro zone) who participate in a case-by-case operation, alongside the ESM, in support of stability in favour of member states of the euro zone, will be invited to participate, as observers, in the meetings of the ESM that deal with this support for stability and its follow-up. They will have timely access to all information and will be duly consulted.
(10) On 20 June 2011, representatives of the governments of the Member States of the European Union authorized the Contracting Parties to this Treaty to request the European Commission and the European Central Bank ("ECB") to carry out the tasks envisaged under this Treaty.
(11) In its statement of 28 November 2010, the Eurogroup announced that standardised and identical collective action clauses ("CAC") will be included in the terms and conditions of all new securities issued by the member states of the euro zone, in order to preserve the liquidity of the markets. As requested by the European Council of 25 March 2011, the specific legal provisions for the inclusion of CAC in the Eurozone State securities were finalized by the Economic and Financial Committee.
(12) In accordance with IMF practices, in exceptional cases, private sector participation, in an appropriate and proportionate form, will be considered in cases where stability support is provided, accompanied by conditionality in the form of a macroeconomic adjustment program.
(13) Like the IMF, SEM will provide stability support to those of its members who can no longer or may no longer be able to access market financing. That is why the Heads of State or Government stated that the loans granted by the ESM will benefit from a privileged creditor status as those of the IMF, while accepting that the IMF is privileged in relation to the ESM. This status will be effective from the date of entry into force of this Treaty. In the case of financial assistance to the SEM granted in the form of loans following a European financial assistance programme existing on the date of the signing of this Treaty, SEM benefits from the same seniority as that of all other loans and obligations of the member of the beneficiary SEM, with the exception of IMF loans.
(14) The Member States of the euro zone will support the granting of a creditor status equivalent to the ESM and other States granting a bilateral loan in coordination with the ESM.
(15) The SME loan conditions for Member States subject to a macroeconomic adjustment programme, including those referred to in Article 40 of this Treaty, cover the financing and operating costs of SEM and should be compatible with the lending conditions of the financial assistance agreements signed between the FSF, Ireland and the Central Bank of Ireland and, on the other hand, between the FSF, the Portuguese Republic and Banco.
(16) In accordance with Article 273 of the Treaty on the Functioning of the European Union ("TFEU"), the Court of Justice of the European Union is competent to hear any dispute between or between the contracting parties and the SEM regarding the interpretation and application of this Treaty.
(17) Monitoring after the programme will be carried out by the European Commission and the Council of the European Union within the framework established by articles 121 and 136 of the TFEU,
AGAINST WHO ITS:
CHAPTER 1. - MEMBERS AND BUT
ARTICLE 1
Institution and members
1. By this Treaty, the Contracting Parties shall establish between them an international financial institution called "European Stability Mechanism" (hereinafter referred to as "MES").
2. The Contracting Parties are the members of the MES.
ARTICLE 2
New members
1. The other Member States of the European Union may become members of the ESM from the date of entry into force of the decision of the Council of the European Union, adopted in accordance with Article 140, paragraph 2, TFEU, putting an end to the derogation they enjoy regarding the adoption of the euro.
2. The new SEM members are admitted on the same terms and conditions as the SEM member countries, in accordance with Article 44.
3. Any new member who adheres to the ESM after its establishment receives, in return for its participation in the capital of the ESM, a number of shares determined in accordance with the contribution key established in Article 11.
ARTICLE 3
Purpose
The aim of the SME is to mobilize financial resources and to provide, under strict conditionality adapted to the financial assistance instrument chosen, support for stability to its members who are aware or at risk of serious financing problems, if it is essential to preserve the financial stability of the euro area as a whole and its member States. To this end, it is authorized to raise funds by issuing financial instruments or entering into financial agreements or arrangements or other arrangements with its members, financial institutions or other third parties.
CHAPTER 2. - DIRECTION
ARTICLE 4
Structure and voting rules
1. The SME has a Board of Governors and Board of Directors, as well as a Director General and staff deemed necessary.
2. Decisions of the Board of Governors and the Board of Directors shall be mutually agreed, by a qualified majority or by a simple majority, in accordance with the provisions of this Treaty. For any decision, a quorum of two thirds of the members with voting rights representing at least two thirds of the vote must be reached.
3. The adoption of a common agreement requires the unanimity of the members participating in the vote. Constraints do not preclude the adoption of a mutually agreed decision.
4. By derogation from paragraph 3, an emergency voting procedure is used when both the Commission and the ECB consider that the urgent failure to adopt a decision on the granting or implementation of financial assistance, as defined in Articles 13 to 18, would threaten the economic and financial sustainability of the euro area. The adoption of a decision by the board of governors referred to in section 5, paragraph 6, points (f) and (g), and the board of directors under this emergency procedure requires a qualified majority of the votes cast.
When the emergency procedure referred to in the first paragraph is used, a transfer of the contingency fund and/or capital released to an emergency reserve fund shall be made to establish a buffer to cover the risks arising from the financial support provided under the emergency procedure. The Board of Governors may decide to cancel the emergency reserve fund and remit its content to the reserve fund and/or to the released capital.
5. The adoption of a qualified majority decision requires 80% of the votes cast.
6. The adoption of a simple majority decision requires a majority of the votes cast.
7. Each SEM member has a number of votes equal to the number of shares assigned to it in the authorized capital of the SEM in accordance with Appendix II. The right to vote is exercised by the person he or she has designated or alternated on the board of governors or the board of directors.
8. Where a member of the SEM has not paid any part of the amount owing in respect of its obligations in relation to the released shares or the appeals of funds referred to in sections 8, 9 and 10 or in relation to the reimbursement of the financial assistance granted under section 16 or 17, the member shall not exercise his or her right to vote as long as the member fails to pay. The voting thresholds are recalculated accordingly.
ARTICLE 5
Board of Governors
1. Each SEM member designates a Governor and an alternate Governor, revocable at any time. The Governor is a member of the government of the MES Finance Member. In his absence, his alternate has full competence to act on his behalf.
2. The Board of Governors decides either to be chaired by the President of the Eurogroup, referred to in Protocol No. 14 on the Eurogroup annexed to the Treaty on the European Union and the TFEU, or to elect a President and a Vice-President, for a two-year term, from among its members. The Chair and the Vice-Chair may be re-elected. A new election is held without delay if the licensee no longer performs the function necessary to be appointed governor.
3. The member of the European Commission in charge of economic and monetary affairs and the President of the ECB, as well as the President of the Eurogroup (if he is not himself president or governor), may attend meetings of the Board of Governors as observers.
4. Representatives of non-euro member states who participate on a case-by-case basis, along with the SEM, in a stable operation in favour of a member state of the euro zone are also invited to participate, as observers, in the meetings of the Board of Governors on this support for stability and its follow-up.
5. Others, including representatives of institutions or organizations such as the IMF, may be invited by the Board of Governors to attend meetings as observers on a case-by-case basis.
6. The Board of Governors shall adopt the following decisions by mutual agreement:
(a) the cancellation of the emergency reserve fund and the transfer of its content to the reserve fund and/or to the released capital in accordance with Article 4, paragraph 4;
(b) the issuance of new shares under conditions other than pairs in accordance with Article 8, paragraph 2;
(c) appeals of funds, in accordance with Article 9, paragraph 1^er;
(d) the modification of the authorized capital of the SEM and the adaptation of its maximum loan capacity, in accordance with Article 10, paragraph 1^er;
(e) taking into account any updating of the ECB's subscription key in accordance with Article 11, paragraph 3, and any changes to Schedule I^re in accordance with Article 11, paragraph 6;
(f) providing support for the stability of SEM, including the economic policy conditionality set out in the Memorandum of Understanding referred to in Article 13, paragraph 3, and the choice of instruments and terms and conditions, in accordance with Articles 12 to 18;
(g) the granting of the mandate to the European Commission to negotiate, in conjunction with the ECB, the conditionality of economic policy with which each financial assistance is provided, in accordance with Article 13, paragraph 3,
(h) the amendment of the policy and guidelines for the pricing of financial assistance, in accordance with section 20;
(i) the amendment of the list of financial assistance instruments available to the SEM in accordance with section 19;
(j) the terms and conditions for the transfer to ESM of the support provided under the EFSF in accordance with Article 40;
(k) the approval of any new application for accession to the SEM pursuant to Article 44;
(l) the amendments to this Treaty as a direct consequence of the accession of new members, in particular with regard to the distribution of capital between the members of the SEM and the calculation of that distribution as a direct result of the accession of a new member to the SEM, in accordance with Article 44; and
(m) delegation to the board of directors of the tasks listed in this section.
7. The Board of Governors shall adopt the following decisions by qualified majority:
(a) the technical terms and conditions for the accession of a new member to the SEM pursuant to Article 44;
(b) the choice to be presided by the President of the Eurogroup, or the qualified majority election of the President and Vice-President of the Board of Governors, in accordance with paragraph 2;
(c) the general regulation of GHGs and the rules of procedure applicable to the Board of Governors and the Board of Directors (including the right to establish committees and subsidiary bodies), in accordance with paragraph 9;
(d) the establishment of a list of activities incompatible with the obligations of a director or alternate director, in accordance with section 6, paragraph 8;
(e) the designation and revocation of the Director General in accordance with section 7;
(f) the establishment of other funds in accordance with Article 24;
(g) the measures to be taken to recover amounts due by a member of the ESM, in accordance with Article 25, paragraphs 2 and 3;
(h) approval of the EMIS annual accounts, pursuant to section 27, paragraph 1^er;
(i) the appointment of members of the Board of Auditors, in accordance with section 30, paragraph 1^er;
(j) the approval of external auditors in accordance with section 29;
(k) the waiver of immunity from the President of the Board of Governors, a Governor, an Alternate Governor, an Administrator, an Alternate Administrator or the Director General, pursuant to section 35, paragraph 2;
(l) the tax regime for GHG agents in accordance with section 36, paragraph 5;
(m) any decision relating to a dispute in accordance with Article 37, paragraph 2; and
(n) any other necessary decision, not expressly provided for in this Treaty.
8. The President shall convene and chair meetings of the Board of Governors. In his absence, these meetings are chaired by the Vice-Chair.
9. The Board of Governors adopts its rules of procedure as well as the general regulation of SEM.
ARTICLE 6
Board of Directors
1. Each Governor shall designate a director and an alternate administrator, revocable at any time, among persons with a high level of competence in economic and financial matters. An alternate administrator has full jurisdiction to act on behalf of the administrator in his absence.
2. The member of the European Commission in charge of economic and monetary affairs and the President of the ECB can each appoint an observer.
3. Representatives of non-euro member states who participate on a case-by-case basis, along with the SEM, in a financial assistance operation in favour of a member state of the euro zone are also invited to participate, as observers, in the meetings of the board of directors that deal with this financial assistance and its follow-up.
4. Other persons, including representatives of institutions or organizations, may be invited by the Board of Governors, on a case-by-case basis, to attend meetings as observers.
5. The Board of Directors shall adopt its decisions by a qualified majority unless otherwise provided by this Treaty. Decisions made under a delegation of the Board of Governors are adopted in accordance with the relevant voting rules set out in section 5, paragraphs 6 and 7.
6. Without prejudice to the powers of the Board of Governors set out in section 5, the Board of Directors shall ensure that the SEM is managed in accordance with the provisions of this Treaty and the general regulation of the SEM adopted by the Board of Governors. It shall make decisions for which it is competent under this Treaty or delegated to it by the Board of Governors.
7. Any vacancy on the board of directors shall be filled immediately in accordance with paragraph 1^er.
8. The Board of Governors determines activities that are incompatible with the obligations of a director or alternate director, the general regulation of the SEM and the rules of procedure of the Board of Directors.
ARTICLE 7
Director-General
1. The Director General shall be designated by the Board of Governors among candidates with the nationality of an SEM member, a relevant international experience and a high level of competence in economic and financial matters. During the performance of his duties, the Director General may not be governor, director, or alternate to any of these functions.
2. The Director General is appointed for a five-year term, renewable once. However, his duties are terminated when the Board of Governors decides.
3. The Director General chairs the Board of Directors meetings and participates in the Board of Governors.
4. The Director General is the head of the SEM services. It is responsible for the organization of services, the appointment and revocation of SEA officers in accordance with the Staff Regulations adopted by the Board of Directors.
5. The Director General is the legal representative of the ESM and is responsible for the day-to-day management of the ESM under the direction of the Board of Directors.
CHAPTER 3. - CAPITAL
ARTICLE 8
Authorized capital
1. The authorized capital of ESM is set at seven hundred billion (700.000.000.000) euros. It is divided into seven (7) million shares, each having a nominal value of one hundred thousand (100,000) euros, which can be subscribed according to the initial contribution key established in Article 11 and calculated in Appendix I^re.
2. The authorized capital consists of freed shares and callable shares. The initial total nominal value of the fully released shares is eighty billion (80.000.000.000) euros. The authorized capital shares initially subscribed are issued au pairs. The other parts are also emitted in pairs, unless the board of governors decides, in particular circumstances, to issue them to other conditions.
3. Authorized capital shares may not be encumbered with charges or data by denying, in any manner whatsoever, and may not be disposed of, except for assignments for the implementation of adjustments of the contribution key established in section 11, to the extent necessary for their distribution to correspond to the new key.
4. Members of the ESM undertake in an irrevocable and unconditional manner to provide their contribution to authorized social capital in accordance with their contribution key set out in Appendix I. They shall respond within an appropriate time frame to all appeals of funds, in accordance with the modalities defined in this Treaty.
5. The liability of each SEM member is limited, in any case, to the share of authorized capital at the emission price. No ESM member may, as a member, be held responsible for ESM obligations. The failure to meet the conditions for granting or receiving financial assistance from the SEM does not affect the obligation to contribute to the authorized capital of the SEM that is the responsibility of any member under this Treaty.
ARTICLE 9
Capital calls
1. The Board of Governors may call at any time the authorized capital not released and establish an appropriate payment period for SEM members.
2. The board of directors may decide by a simple majority to call the authorized capital not released to restore the level of the released capital if, due to the absorption of losses, its amount is less than the level established in section 8, paragraph 2, which may be amended by the board of governors in accordance with the procedure provided for in section 10, and establish an appropriate payment period for members of the ESM.
3. The Director General shall, in due course, call for the unauthorized capital not released if necessary to avoid the ability of the SEM to meet its obligations for payment, scheduled or otherwise, to its creditors. He informs the board of directors and the board of governors of this appeal. When a lack of potential SEM funding is identified, the Director General calls for capital as soon as possible, so that the SEM has sufficient funds to fully reimburse its creditors to the expected deadlines. Members of the ESM undertake in an irrevocable and unconditional manner to pay on request the funds requested by the Director General under this subsection within seven (7) days of receipt of that application.
4. The Board of Directors shall adopt the terms and conditions applicable to capital appeals under this section.
ARTICLE 10
Change in authorized capital
1. The Board of Governors regularly and at least every five years reviews the maximum loan capacity and the adequacy of the authorized capital of the ESM. It may decide to change the amount of authorized capital and to amend section 8 and Schedule II accordingly. This decision comes into force after the members of MES informed the depositary of the fulfilment of their applicable national procedures. The new shares are assigned to the SEM members in accordance with the contribution key established in section 11 and Appendix I^re.
2. The Board of Directors shall adopt the terms and conditions applicable to any modification to the capital under subsection 1^er.
3. When a Member State of the European Union becomes a new member of the ESM, the authorized capital of the ESM is automatically increased by multiplying the respective amounts then in force by the ratio, as part of the appropriate allocation key established in accordance with Article 11, between the weighting of the new ESM member and the weighting of the existing ESM members.
ARTICLE 11
Contribution key
1. Subject to paragraphs 2 and 3, the contribution key for the subscription to the authorized capital of the ESM is based on the subscription key, by the national central banks of the members of the ESM, to the capital of the ECB, pursuant to Article 29 of the Protocol (No. 4) on the statutes of the European system of central banks and the European Central Bank ("SEBC statistics"), annexed to the Treaty on the European Union and
2. The contribution key for the ESM's authorized capital subscription is set out in Appendix I^re.
3. The contribution key for the ESM's authorized capital subscription is adapted when:
(a) a Member State of the European Union becomes a new member of the SEM and that the amount of the authorized capital is increased automatically, in accordance with Article 10, paragraph 3; or
(b) the temporary correction for a period of twelve (12) years, applicable to an SEM member in accordance with section 42, shall be terminated.
4. The Board of Governors may decide to take into account any updates to the ECB capital subscription key referred to in paragraph 1^erwhere the contribution key is adjusted in accordance with paragraph 3 or in the event of an amendment to the authorized capital under section 10, paragraph 1^er.
5. When the contribution key for the ESM's authorized capital subscription is adapted, the ESM members shall make authorized capital transfers to the extent necessary to match the distribution of the authorized capital to the new key.
6. Appendix I^re is amended if the Board of Governors decides to make any of the modifications provided for in this section.
7. The board of directors shall take all other measures necessary for the purposes of this section.
CHAPTER 4. - OPERATIONS
ARTICLE 12
Principles
1. If it is essential to preserve the financial stability of the euro area as a whole and its member states, the SME can provide a member of the SEM with support for stability, subject to strict conditionality adapted to the financial assistance instrument chosen. This conditionality may take the form, inter alia, of a macroeconomic adjustment program or the obligation to continue to meet pre-established eligibility conditions.
2. Without prejudice to Article 19, support for the stability of ESM can be provided through the instruments provided for in Articles 14 to 18.
3. Collective action clauses will appear, as of 1^er January 2013, in all new state securities with a maturity of more than one year that will be issued in the euro area, so as to ensure an identical legal effect.
ARTICLE 13
Procedure for supporting stability
1. An ESM member may apply for stability support to the Chair of the Board of Governors. This request indicates the financial assistance instrument(s) to be considered. Upon receipt of this request, the President of the Board of Governors shall appoint the European Commission, in conjunction with the ECB:
(a) assess the existence of a risk to the financial stability of the euro area as a whole or its member States, unless the ECB has already submitted an analysis under Article 18, paragraph 2;
(b) assess the sustainability of public debt. When this is useful and possible, it is expected that this evaluation will be carried out in collaboration with the IMF.
(c) to assess the actual or potential funding needs of the member of the ESM concerned.
2. Based on the application of the SEM member and the assessment referred to in subsection 1^er, the Board of Governors may decide to provide, in principle, stability support to the member of the SEM concerned in the form of a financial assistance facility.
3. If it adopts a decision under paragraph 2, the Board of Governors directs the European Commission B in conjunction with the ECB and, where possible, in conjunction with IMF B to negotiate with the member of the ESM concerned a memorandum of understanding defining precisely the conditionality of this financial assistance facility. The content of the MOU takes into account the seriousness of the weaknesses to be addressed and the financial assistance instrument chosen. At the same time, the Director General of SEM prepares a proposal for agreement on the financial assistance facility specifying the terms and conditions of the assistance and the instruments selected, which will be adopted by the Board of Governors.
The MOU must be fully compatible with the economic policy coordination measures provided by the TFEU, in particular with any legal act of the European Union, including any notice, warning, recommendation or decision directed to the member of the MES concerned.
4. The European Commission signs the Memorandum of Understanding on behalf of the SEM, provided it complies with the conditions set out in paragraph 3 and has been approved by the Board of Governors.
5. The Board of Directors approves the Financial Assistance Facility Agreement which specifies the financial aspects of the stability support to be awarded and, where applicable, the terms and conditions for the payment of the first instalment of the assistance.
6. The SME sets up an appropriate alert system to be sure to receive in due course any refunds due by the SEM member for stability support.
7. The European Commission B, in conjunction with the ECB and, where possible, in conjunction with the IMF, is responsible for ensuring compliance with the conditionality of financial assistance.
ARTICLE 14
Financial assistance provided by SEM as a precaution
1. The Board of Governors may decide to provide, as a precaution, financial assistance in the form of a line of credit with conditions or lines of credit with enhanced conditions in accordance with section 12, paragraph 1^er.
2. The conditionality of the financial assistance provided by the SEM as a precaution is defined in the Memorandum of Understanding, in accordance with Article 13, paragraph 3.
3. The terms and conditions of the financial assistance provided by the ESM as a precaution are specified in an agreement on the financial assistance facility granted as a precaution, signed by the Director General.
4. The Board of Directors adopts detailed guidelines on how to implement the financial assistance provided by the SEM as a precaution.
5. The Board of Directors agrees, on a proposal by the Director General and upon receipt of the report of the European Commission established pursuant to Article 13, paragraph 7, if the line of credit is to be maintained.
6. After the ESM member first draws from the funds made available to him (by a loan or purchase on the primary market), the Board of Directors agrees on a joint agreement, on the proposal of the Director General and on the basis of an assessment by the European Commission, in conjunction with the ECB, whether the credit line remains appropriate or if another form of financial assistance is required.
ARTICLE 15
Financial assistance for the recapitalization of financial institutions of an ESM member
1. The Board of Governors may decide to grant financial assistance in the form of loans to an SEM member, with the specific purpose of recapitalizing the financial institutions of that member.
2. The conditionality of financial assistance for the recapitalization of financial institutions of an SEM member is defined in the Memorandum of Understanding, in accordance with Article 13, paragraph 3.
3. Without prejudice to Articles 107 and 108 of the TFEU, the financial terms and conditions of financial assistance for the recapitalization of financial institutions of an SEM member are specified in an agreement on financial assistance facility signed by the Director General.
4. The Board of Directors adopts detailed guidelines on how to implement financial assistance for the recapitalization of financial institutions of a member of the ESM.
5. Where applicable, the Board of Directors agrees on a proposal by the Director General and upon receipt of the report of the European Commission established pursuant to Article 13, paragraph 7, of the payment of the financial assistance instalments in the first instalment.
ARTICLE 16
SME loans
1. The Board of Governors may decide to grant financial assistance in the form of a loan to an SEM member in accordance with section 12.
2. The conditionality of which the loans granted by the ESM are included in a macroeconomic adjustment programme defined in the MOU, in accordance with Article 13, paragraph 3.
3. The terms and conditions of each loan granted by the ESM are specified in a Financial Assistance Facility Agreement signed by the Director General.
4. The Board of Directors adopts detailed guidelines on the terms and conditions for the implementation of loans granted by the ESM.
5. The Board of Directors agrees, on a proposal by the Director General and upon receipt of the report of the European Commission prepared in accordance with Article 13, paragraph 7, of the payment of the financial assistance instalments in the first instalment.
ARTICLE 17
Primary market support
1. The Board of Governors may decide to make arrangements to purchase securities issued by an ESM member on the primary market in accordance with section 12 and to maximize the cost-effectiveness of financial assistance.
2. The conditionality of the primary market support device is defined in the MOU in accordance with Article 13, paragraph 3.
3. The financial terms and conditions for the purchase of these securities are specified in an agreement on the financial assistance facility signed by the Director General.
4. The Board of Directors adopts detailed guidelines on how to implement the primary market support system.
5. The Board of Directors agrees, on the proposal of the Director General and upon receipt of the report of the European Commission established in accordance with Article 13, paragraph 7, of the payment of financial assistance to a beneficiary Member State by intervener on the primary market.
ARTICLE 18
Secondary market support device
1. The Board of Governors may decide to make arrangements for conducting secondary market transactions relating to securities issued by an SEM member in accordance with section 12, paragraph 1^er.
2. Decisions to intervene in the secondary market to deal with the risk of contagion are made on the basis of an analysis by the ECB that recognizes the existence of an exceptional situation in financial markets and risks to financial stability.
3. The conditionality of the secondary market support device is defined in the MOU in accordance with Article 13, paragraph 3.
4. The financial terms and conditions of intervention on the secondary market are specified in an agreement on financial assistance facility signed by the Director General.
5. The Board of Directors adopts detailed guidelines on how to implement the secondary market support system.
6. The Board of Directors agrees, on the proposal of the Director General, to intervene in the secondary market.
ARTICLE 19
Revision of the list of financial assistance instruments
The Board of Governors may review the list of financial assistance instruments provided for in sections 14 and 18 and decide to amend it.
ARTICLE 20
Tariff Policy
1. When it provides stability support, SEM seeks to cover all its funding and operating costs and provides an appropriate margin.
2. The pricing of all financial assistance instruments is set out in guidelines adopted by the Board of Governors.
3. The tariff policy may be reviewed by the Board of Governors.
ARTICLE 21
Borrowing operations
1. MES is empowered to borrow capital markets from banks, financial institutions or other individuals or institutions to achieve its purpose.
2. The terms and conditions of the borrowing operations are defined by the Director General in accordance with the detailed guidelines adopted by the Board of Directors.
3. ESM uses appropriate risk management tools, which are regularly reviewed by the Board of Directors.
CHAPTER 5. - FINANCIAL MANAGEMENT
ARTICLE 22
Investment policy
1. The Director General is implementing a prudent investment policy of SEM, which ensures the highest level of credit to SEM, in accordance with the guidelines adopted and regularly reviewed by the Board of Directors. The SME is authorized to use a portion of its investment portfolio's return to cover its operating costs and administrative costs.
2. GHG operations are consistent with the principles of good financial management and good risk management.
ARTICLE 23
Dividend distribution policy
1. The board of directors may decide, by a simple majority, to distribute a dividend to members of the ESM when the amount of the released capital and the reserve fund exceeds the level required to maintain the SEM's lending capacity and when the proceeds of the investment are not necessary to avoid arrears of payment to creditors. Dividends shall be distributed on a pro rata basis in the released capital, taking into account the possible advance payment referred to in section 41, paragraph 3.
2. As long as the ESM has not provided financial assistance to any of its members, the proceeds of the investment of its released capital shall, after deduction of operating costs, be distributed to its members on the basis of their respective shares in the released capital, provided that the intended effective loan capacity is fully available.
3. The Director General implements the ESM dividend policy in accordance with the guidelines adopted by the Board of Directors.
ARTICLE 24
Reserve and other funds
1. The Board of Governors shall establish a reserve fund and, where appropriate, other funds.
2. Without prejudice to Article 23, the net income generated by GHG operations and the proceeds of financial sanctions imposed on SEM members under the multilateral monitoring procedure, the excessive deficit procedure and the procedure for macroeconomic imbalances established under the TFEU are placed in a reserve fund.
3. Reserve Fund resources are invested in accordance with the guidelines adopted by the Board of Directors.
4. The Board of Directors shall adopt the necessary rules for the institution, management and use of other funds.
ARTICLE 25
Loss coverage
1. The losses to GHG operations are charged:
(a) Firstly, on the contingency fund;
(b) Secondly, on released capital, and
(c) finally, on an appropriate amount of authorized capital not released, which is called in accordance with Article 9, paragraph 3.
2. If a member of the ESM does not pay the funds called in accordance with Article 9, paragraphs 2 and 3, an upward appeal of funds is made to all members of the ESM to receive the full amount of the required capital. The Board of Governors decides on the appropriate course of action to be taken to ensure that the member of the SEM concerned settles his or her debt with the SEM within a reasonable time. The Board of Governors may require payment of late interest on the amount due.
3. When a member of the ESM settles his or her debt referred to in paragraph 2, the excess funds are transferred to other members of the ESM in accordance with the rules adopted by the Board of Governors.
ARTICLE 26
Budget
The Board of Directors approves the GHG budget each year.
ARTICLE 27
Annual accounts
1. The Board of Governors approves the ESM annual accounts.
2. MES publishes an annual report containing a certified statement of accounts and provides its members with a quarterly summary of its financial situation and a profit and loss account highlighting the results of its operations.
ARTICLE 28
Internal audit
An internal audit function is established in accordance with international standards.
ARTICLE 29
External audit
The ESM accounts are audited by independent external auditors approved by the Board of Governors and responsible for the certification of the annual financial statements. The external auditors have every authority to review all books and accounts of the SSM, and to obtain any information on its operations.
ARTICLE 30
Board of Auditors
1. The Board of Auditors is composed of five members appointed by the Board of Governors as a result of their financial and audit expertise, and includes two members of the senior accounting institutions of the members of the ESM, who in turn serve as B and a member of the European Court of Auditors.
2. Members of the Board of Auditors are independent. They do not seek or accept instructions from the management bodies of SMEs, SEM members or any other public or private organization.
3. The Board of Auditors prepares independent audits. It controls the ESM accounts and checks the regularity of operating and balance sheet accounts. It has full access to any ESM document required to perform its tasks.
4. The Board of Auditors may inform the Board of its findings at any time. Each year, he prepares a report to be submitted to the Board of Governors.
5. The Board of Governors shall communicate the annual report to national parliaments as well as to the higher accountability institutions of members of the MES and the European Court of Accounts.
6. Any issues relating to this section will be defined in the general regulation of GHGs.
CHAPTER 6. - GENERAL PROVISIONS RELATING TO MYFF
ARTICLE 31
Place of establishment
1. The MES has its headquarters and main office in Luxembourg.
2. MES can establish a liaison office in Brussels.
ARTICLE 32
Legal status, privileges and immunities
1. In order to enable SEM to fulfil its purpose, the legal status, privileges and immunities set out in this article shall be granted to it in the territory of each of its members. The SME strives to obtain recognition of its legal status, privileges and immunities on other territories where it intervenes or holds assets.
2. MES has full legal personality and full legal capacity to:
(a) acquire and dispose of movable and immovable property;
(b) enter into contracts;
(c) Justice, and
(d) enter into a siege agreement and/or a protocol with a view, where appropriate, to recognize or give effect to its legal status, privileges and immunities.
3. SMEs and their assets, financing and assets, wherever they are located and regardless of the holder, enjoy the immunity of jurisdiction in all its aspects, except to the extent that SEM expressly waives it for a specified procedure or under a contract, including documentation relating to funding instruments.
4. The property, financing and assets of the SEM, wherever located and regardless of the holder, may not be searched, requisitioned, forfeited, expropriated or otherwise seized by the executive, judicial, administrative or legislative authority.
5. The archives of the SEM and all documents belonging to it or that it holds are inviolable.
6. MES premises are inviolable.
7. The official communications of SEM are processed by each member of the SEM and by each State that has recognized its legal status, privileges and immunities in the same way as the official communications of a State that is a member of the SEM.
8. To the extent necessary to carry out the activities provided for in this Treaty, all property, financing and assets of SEM are exempt from any restrictions, regulations, controls and moratoriums of any kind.
9. The SME is exempt from any obligation to obtain an authorization or approval, as a credit institution, investment service provider or authorized, approved or regulated entity, imposed by the legislation of each of its members.
ARTICLE 33
MEAS personnel
The Board of Directors defines the terms and conditions of employment of the Director General and other SEM officers.
ARTICLE 34
Professional secret
Members or former members of the Board of Governors and the Board of Directors, as well as any other person working or working for or in connection with the SEM, are required not to disclose the information covered by professional secrecy. They are obliged, even after the termination of their duties, not to disclose information that, by their nature, is covered by professional secrecy.
ARTICLE 35
Immunity of persons
1. In the interest of SEM, the President of the Board of Governors, Governors, Alternate Governors, Directors, Alternate Directors, and the Director General and other SEM officers may not be prosecuted on the basis of the acts performed in the official exercise of their duties and are entitled to the inviolability of their official documents and documents.
2. The Board of Governors may waive, to the extent and conditions it defines, the immunities conferred by this section with respect to the President of the Board of Governors, a Governor, an Alternate Governor, a Director, an Alternate Administrator or the Director General.
3. The Director General may waive the immunity of any SSM agent (with the exception of his or her).
4. Each member of the SEM shall promptly take the necessary measures to give effect to this Article in its legislation and inform the SEM of the adoption of these measures.
ARTICLE 36
Tax exemption
1. As part of its official activities, SMEs, assets, revenues and assets, as well as transactions and transactions authorized by this Treaty, are exempt from all direct taxes.
2. Members of the SEM shall, whenever possible, make appropriate arrangements for the remission or repayment of the amount of indirect duties or taxes to the sale in the price of real property or furniture when the SEM makes for its official use important purchases whose price includes such fees and taxes.
3. No exemption is granted with respect to taxes, taxes and duties that are only the mere remuneration of general utility services.
4. Goods imported by SEM and required to carry out its official activities are exempt from all duties, taxes, prohibitions or restrictions on imports.
5. SEM agents are subject to an internal tax collected for the benefit of SEM on salaries and emoluments paid by SEM in accordance with the rules adopted by the Board of Governors. From the date on which this tax is applied, these treatments and emoluments are exempt from any national income tax.
6. No tax of any kind is collected on any of the obligations or financial securities issued by the ESM, or on any interest and dividends therein, regardless of the holder:
(a) if this tax presents, in respect of these financial obligations or securities, a discriminatory nature based exclusively on their origin; or
(b) if this tax has the sole legal basis for the place or currency of issue, the place or the prescribed or actual settlement currency, or the territorial situation of an office or place of activity of the ESM.
ARTICLE 37
Interpretation and settlement of disputes
1. Any questions relating to the interpretation or application of the provisions of this Treaty and the general regulation of SEMs that would arise between SEM and one of its members, or between SEM members, shall be submitted to the Board of Directors for decision.
2. The Board of Governors shall rule on any dispute between SMEs and any of its members, or members of the SEM between them, related to the interpretation and application of this Treaty, including any dispute relating to the compatibility of the decisions adopted by SEM with this Treaty. For the purposes of such a decision, the right to vote of the member(s) of the Board of Governors appointed by the member(s) concerned of the SEM is suspended, and the threshold to be reached for the adoption of the decision is recalculated accordingly.
3. If a member of the MES contests the decision referred to in paragraph 2, the dispute shall be submitted to the Court of Justice of the European Union. The decision of the Court of Justice of the European Union is binding on the parties, who take the necessary steps to comply with it within the time limit set by the Court in its judgment.
ARTICLE 38
International cooperation
In order to be able to carry out its tasks, SME is empowered, within the framework of this Treaty, to cooperate with the IMF, with any State providing timely financial assistance to one of its members and with any international organization or entity with specific responsibilities in related fields.
CHAPTER 7. - TRANSITIONAL PROVISIONS
ARTICLE 39
Relation with FESF’s lending capacity
During the transitional phase between the entry into force of this Treaty and the complete dissolution of the EFSF, the overall loan capacity of the ESM and the EFSF does not exceed 500 billion (500.000.000.000.000) euros, without prejudice to the periodic review of the adequacy of the maximum loan capacity provided for in Article 10. The Board of Directors adopts detailed guidelines for the calculation of the term commitment capacity to ensure compliance with the overall loan cap.
ARTICLE 40
Transfer of support under the FWF
1. By derogation from section 13, the Board of Governors may decide that the FSF's commitments to provide financial assistance to an SEM member under the agreement with that member are assumed by the SEM to the extent that these commitments relate to unpaid or unfunded loans.
2. ESM may, if authorized by the Board of Governors, acquire the rights and obligations of the FSF, in particular with respect to all or part of the rights and obligations under and under existing loans.
3. The Board of Governors shall adopt the detailed procedures necessary to ensure the effective transfer of FSF's obligations to SEM referred to in paragraph 1^er and any transfer of rights and obligations referred to in paragraph 2.
ARTICLE 41
Payment of initial capital
1. Without prejudice to paragraph 2, the payment of the shares released from the original capital subscribed by each member of the ESM shall be made in five annual payments each representing 20% of the total amount. Each SEM member shall make the first payment within fifteen days of the date of entry into force of this Treaty. The other four (4) payments are due respectively to the first, second, third and fourth anniversary of the date of the first payment.
2. During the five-year period in which the phased release of capital takes place, MES members accelerate the payment of the released shares, in good time prior to the date of issue, to maintain a minimum ratio of 15% between the released capital and the outstanding of the GHG emissions and to guarantee a combined minimum loan capacity of the MES and the FESF of 500 billion (500.000.000.000) euros.
3. A member of the ESM may decide to make an advance payment of its shares in the released capital.
ARTICLE 42
Temporary correction of contribution key
1. SEM members initially subscribe the authorized capital based on the initial contribution key defined in Appendix 1^re. The temporary correction taken into account in this initial contribution key applies for a period of twelve (12) years from the date of adoption of the euro by the member of the ESM concerned.
2. If a new SEM member registers, in the year preceding the date of its accession to SEM, a gross domestic product (GDP) per capita at market prices expressed in euros less than 75% of the average gross domestic product of the European Union per capita at market prices, its contribution key for the subscription to the authorized capital of SEM, determined in accordance with Article 10, is temporarily corrected and equal to the sum of:
(a) 25% of the share held by its national central bank in the capital of the ECB, determined in accordance with Article 29 of the statutes of the ECB; and
(b) 75% of its share in the gross national income (GNI) of the euro area, at market prices expressed in euros, in the year preceding the date of its accession to the ESM.
The percentages referred to in points (a) and (b) are rounded downwards or upwards to the nearest number of 0.0001 per cent. The statistical data taken into account are those published by Eurostat.
3. The temporary correction referred to in paragraph 2 applies for a period of twelve (12) years from the date of adoption of the euro by the member of the ESM concerned.
4. As a result of the temporary correction of the contribution key, the relevant portion of the shares assigned to the member of the ESM pursuant to paragraph 2 is redistributed between members of the ESM who do not receive a temporary correction, on the basis of the shares held in the capital of the ECB in accordance with Article 29 of the statutes of the ESA, just before the allocation of shares to the new member of the ESM.
ARTICLE 43
First appointments
1. Each SEM member shall designate its Governor and alternate Governor within two weeks of the entry into force of this Treaty.
2. The Board of Governors shall designate the Director General and each Governor shall designate a director and an alternate director within two months after the entry into force of this Treaty.
CHAPTER 8. - FINAL PROVISIONS
ARTICLE 44
Access
In accordance with Article 2, the other Member States of the European Union may accede to this Treaty by submitting their application to the ESM after the Council of the European Union has adopted, in accordance with Article 140, paragraph 2, TFEU, the decision to end the derogation they benefit from regarding the participation in the euro. The Board of Governors approves the application for membership of the new SEM member and the related technical terms and conditions, as well as the amendments to this Treaty as a direct result of this new membership. After the approval of the application by the Board of Governors, the new members of the SEM adhere to the SEM at the time of deposit of the instruments of accession with the depositary, which notify the depositary to the other members.
ARTICLE 45
Annexes
The following annexes to this Treaty are an integral part of the Treaty:
(1) Annex I^re : key to contributing to SEM; and
(2) Annex II: Authorized capital subscriptions.
ARTICLE 46
Deposit
This Treaty shall be deposited with the General Secretariat of the Council of the European Union (hereinafter referred to as the Depositary), which shall issue certified copies to all signatories.
ARTICLE 47
Ratification, approval or acceptance
1. This Treaty is subject to ratification, approval or acceptance of the signatories. Instruments of ratification, approval or acceptance shall be handed over to the depositary.
2. The depositary shall inform the other signatories of the deposit of each instrument and of the date of such deposit.
ARTICLE 48
Entry into force
1. This Treaty comes into force on the date of deposit of instruments of ratification, approval or acceptance by signatories whose initial subscription represents at least 90% of the total subscriptions listed in Appendix II. The list of ESM members is adapted as appropriate. The key determined in Appendix I^re is then recalculated and the total capital authorized in section 8, paragraph 1^er, and in Annex II, as well as the initial total nominal value of the released shares indicated in Article 8, paragraph 2, are reduced accordingly.
2. For each signatory that subsequently deposits its instrument of ratification, approval or acceptance, this Treaty shall enter into force on the day after the date of deposit.
3. For each State that adheres to this Treaty in accordance with Article 44, this Treaty shall enter into force on the twentieth day following the deposit of its instrument of accession.
Done in Brussels on two February two thousand twelve in one original copy, whose versions in German, English, Spanish, Estonian, Finnish, French, Greek, Irish, Italian, Maltese, Dutch, Portuguese, Slovak, Slovenian and Swedish are equally authentic, and deposited in the archives of the depositary which transmits certified copies to all contracting parties.
____
Notes
(1) OJ L 91 of 6.4.2011, p. 1^er.

Annex I^re
EMIS contribution key


Annex II
Authorized capital subscriptions


Treaty establishing the European stability mechanism between the Kingdom of Belgium, the Federal Republic of Germany, the Republic of Estonia, Ireland, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Republic of Italy, the Republic of Cyprus, the Grand Duchy of Luxembourg, Malta, the Kingdom of the Netherlands, the Republic of Austria, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic and the Republic of Finland, 2 February 2012