LAW 149 1994
Official Gazette No. 41,450 of June 19, 1994
Through which the "Agreement Establishing the Multilateral Investment Guarantee Agency" is approved, made in Washington on 25 May 1986. Summary
THE CONGRESS OF COLOMBIA,
having regard to the text of the "Agreement Establishing the Multilateral Investment Guarantee Agency", done at Washington on May 25, 1986, which reads:
Multilateral Guarantee Agency Investment
AGENCY AGREEMENT ESTABLISHING tHE MULTILATERAL INVESTMENT GUARANTEE
Governments Presented by the Board of Governors
the International Bank for Reconstruction and Development.
11 October 1985 PREAMBLE
The Contracting States Whereas it is necessary to strengthen international cooperation for economic development and promoting the contribution of foreign investment in general and private foreign investment especially to such development;
Recognizing that mitigating concerns for non-commercial risks to facilitate and encourage greater flow of foreign investment to developing countries;
Desiring to enhance the flow to developing countries of capital and technology for productive purposes under conditions consistent with their needs, policies and objectives for development, on the basis of fair and stable standards for the treatment of foreign investment ;
Convinced that the Multilateral Investment Guarantee Agency can play an important role in encouraging foreign investment complementing national and regional investment guarantee programs and activities of private insurers of non-commercial risks, and
Recognizing that body, to the extent possible, should meet its obligations without resort to its callable capital and the continued improvement of conditions in terms of investments would contribute to this objective,
have agreed as follows:
CREATION, LEGAL STATUS, PURPOSES AND DEFINITIONS
ARTICLE 1o. ESTABLISHMENT AND LEGAL STATUS OF AGENCY.
A) Through this agreement, the Multilateral Investment Guarantee Agency (hereinafter the Agency) is created.
B) The Agency shall have full legal personality and, in particular, ability to:
Ii) to acquire and dispose of movable and immovable property;
Iii) to institute legal proceedings.
. OBJECTIVE AND PURPOSES. The objective of the Agency will encourage the flow of investments for productive purposes among member countries, and especially to the developing member countries, thus supplementing the activities of the International Bank for Reconstruction and Development (hereinafter called the Bank) and the International finance Corporation and other international development finance institutions.
To meet its goal, the Agency:
a) issue guarantees, including coinsurance and reinsurance, against non-commercial risks in respect of investments made in member countries from other member country;
B) Undertake appropriate measures to promote the flow of investment to developing member countries and between them complementary activities, and
c) to exercise all other concomitant powers necessary or desirable to achieve their goal.
In all decisions, the Agency shall be governed by the provisions of this article.
ARTICLE 3. DEFINITIONS. For the purposes of this Agreement:
a) "Member" means a State for which this Convention has entered into force in accordance with Article 61.
b) "Host country" or "host government" means a member, its government, or a public agency of a member in whose territories, as defined in Article 66, will be located an investment that is guaranteed or reinsured by the Agency or the Agency is considering guaranteeing or reinsure.
C) "developing member country" means a member of the Agency designated in Appendix A to this Convention including amendments to this Appendix that make from time to time by the Governing Council referred to in Article 30 (hereinafter referred to as the Council).
D) "special majority" means an affirmative vote of not less than two thirds of the total voting rights representing not less than fifty-five percent of the outstanding shares of capital Agency.
E) "freely usable currency" means (i) a coin so designated from time to time by the International Monetary Fund and (ii) any other currency that is freely available and used effectively, the Board of Directors to It referred to in Article 30 (hereinafter the Board) designated for the purposes of this Convention, after consultation with the International Monetary Fund and with the approval of the country issuing the currency.
CHAPTER II. MEMBERS AND CAPITAL
ARTICLE 4. MEMBERS.
A) may be members of the Agency all members of the Bank and Switzerland.
B) The founding members of the Agency shall be the States which are designated in Appendix A of this Agreement and are parts of it on October 30, 1987 or earlier.
The 5th ITEM. CAPITAL.
A) The authorized capital of the Agency shall be one billion Special Drawing Rights (SDR 1,000,000,000). The authorized capital is divided into 100,000 shares with a par value of SDR 10,000 each, which will be available to members for underwriting purposes. All payment obligations of members with respect to the authorized capital shall be met on the basis of the average value of the SDR in terms of dollar of the United States of America in the period from January 1, 1981 and June 30, 1985 value corresponding to $ 1,082 in the United States per SDR.
B) When admitted a new member, the authorized capital will increase to the extent that the number of authorized shares at this time is insufficient to provide the shares to be subscribed by such member pursuant to Article 6. | || c) the Council, by special majority, may at any time increase the authorized capital of the Agency.
ARTICLE 6o. SHARE SUBSCRIPTION. Each founding member of the Agency shall subscribe at par value the number of shares of capital stipulated opposite its name in Appendix A of this Agreement. All other members shall subscribe shares of Capital in the number and terms and conditions as the Board may determine, but in any case at a price lower emission at face value. No member shall subscribe to less than fifty shares.
The Council shall prescribe rules under which members may subscribe for additional shares of the authorized capital.
ARTICLE 7. DIVISION AND REQUIREMENTS FOR PAYMENT OF CAPITAL. The initial subscription of each member shall be paid as follows:
i) Within ninety days from the date this Agreement enters into force for each member ten percent of the price of each share will be paid cash as stipulated in Section a) of Article 8 and an additional ten percent in the form of non-negotiable promissory notes which no interest or similar obligations that have become effective in accordance with a decision of the board to meet the Agency's obligations.
Ii) The balance will be subject to payment at the request of the Agency as necessary to meet their obligations.
Article 8. PAYMENT OF SHARE SUBSCRIPTION.
A) Payments of subscriptions shall be made in freely usable currencies; however, the developing member countries may pay in their own currencies up to twenty five percent of the cash portion of its paid capital subscriptions payable under Article 7 i).
B) The requirements of any portion of the subscriptions paid will not be uniform for all actions.
C) If the amount received by the Agency of a requirement be inadequate to meet the obligations that the requirements have made it necessary, the Agency may make additional requirements successive unpaid subscriptions until the aggregate amount received is sufficient to meet such obligations.
D) Liability on shares shall be limited to the unpaid portion of the issue price.
Article 9. VALUATION OF CURRENCIES. For the purposes of this Convention, whenever necessary to determine the value of one currency in terms of another, such value shall be as reasonably determined by the Agency, after consultation with the International Monetary Fund.
ARTICLE 10. REFUNDS.
A) As soon as possible, the Agency shall reimburse the amounts paid by them on account of the subscribed capital requirement if the following conditions are met and to the extent they are met:
i) the request was made to satisfy a claim arising from a guarantee or reinsurance contract and thereafter the Agency has regained all or part payment in freely usable currency, or
Ii) the order was made because of non-payment by a member and thereafter such member had made the payment in whole or part, or
iii) That the Council by special majority, determines that the Agency's financial situation allows such amounts are repaid in whole or part from the Agency's revenue.
B) Any reimbursement to a member under this Article shall be made in freely usable currency in the proportion corresponding to payments made by that member to the total amount paid in accordance with the requests made prior to such refund .
C) The equivalent of amounts refunded to a member under this Article shall become part of the obligations of member capital enforceable according to Article 7 ii).
ARTICLE 11. RISKS COVERED.
A) Subject to the provisions of Sections b) and c) below, the Agency may guarantee eligible investments against a loss resulting from one or more of the following types of risks:
i) Currency Transfer .
The introduction attributable to the recipient of any government restriction on the transfer abroad of the recipient country of its currency into a freely usable currency or another acceptable to the holder of the guarantee currency, including the lack of action by the recipient government, within a reasonable period, on an application of such holder for such transfer;
Ii) Expropriation and similar measures.
Any legislative action or administrative action or omission attributable to the host government which has the effect of depriving the holder of a guarantee of ownership or control of your investment or a substantial benefit derived therefrom, with the exception of non-discriminatory measures of general application which governments normally take in order to regulate economic activity in their territories;
Iii) Breach of contract.
Any refusal or failure by the recipient of a contract with the holder of a guarantee government when a) the holder of a guarantee does not have recourse to a judicial or arbitral forum in order to settle the claim rejection or failure, ob ) that does not dictate a decision within a reasonable time the wording of the requirements of the guarantee contracts in accordance with the regulations of the Agency, or c) can not be enforced that decision, and
iv) War and civil unrest.
Any military action or civil disturbance in any territory of the host country to which this Convention applies in accordance with the provisions of Article 66.
b) Under a joint application of the investor and the host country, the Board, by special majority, may approve the extension of coverage under this Article to specific non-commercial risks other than those included in the previous section a), but in no case to the risk of devaluation or depreciation of the currency.
C) not be covered losses resulting from the following:
i) Any action or omission of the recipient government which has given its consent the holder of the guarantee or for which it is responsible, and || | ii) any act or omission of the recipient government or any other event occurring before the conclusion of the contract of guarantee.
ARTICLE 12. Eligible Investments.
A) Eligible investments include contributions to capital, including loans granted medium- or long-term or guaranteed by holders of shares in the share capital of the company in question, and forms of direct investment the board may determine;
B) The Board by special majority, may extend eligibility to any other form of investment medium or long term, unless the previous loans other than those mentioned in Section a) may be eligible only if they are linked to a guaranteed specific investment or proposed to protect guaranteed by the Agency;
C) The guarantee shall be restricted to those investments which the performance begins after being registered by the Agency the application of the guarantee. Such investments may include:
i) Transfers of foreign exchange made to modernize, expand or develop an existing investment, and
ii) Using income from existing investments which could otherwise be remitted abroad receiver.
D) In guaranteeing an investment, the Agency shall satisfy the following:
i) the economic soundness of the investment and its contribution to the development of the host country;
Ii) The legality of the investment under the laws and regulations of the host country;
Iii) investment harmony with the objectives and priorities declared by the host country, and
iv) The conditions for investments in the host country, including the availability of fair and equitable treatment and legal protection for investment.
ARTICLE 13. ELIGIBLE INVESTORS.
A) Any natural person and any juridical person may fulfill the conditions required for the guarantee of the Agency, provided that:
i) The individual is a national of a Member country of the host country;
Ii) The legal person is incorporated and has established its business in a member country or the majority of its capital is owned by one or more member countries or nationals of the member or members, provided that none of these cases that member is itself the recipient country, and
iii) the legal entity, whether private or not owned, run on commercial terms;
B) In case the investor has more than one nationality, for the purposes of Section a) above the nationality of a member shall prevail over the nationality of a country not a member, and the nationality of the host country prevail on the nationality of any other member;
C) Under the joint request of the investor and the host country, the Board, by special majority, may extend eligibility to a natural person who is a national of the host country or a legal entity that is incorporated in the host country or whose capital is mostly owned by their nationals, provided that the assets in question are transferred from outside the host country.
ARTICLE 14. RECEIVING COUNTRIES ELIGIBLE. Investments shall be guaranteed under this Chapter only if they are made in the territory of a developing member country.
ITEM 15. ADOPTION OF THE RECIPIENT COUNTRY. The Agency shall not conclude any contract of guarantee before the host government has approved the issuance of the guarantee by the Agency against risks whose coverage is specified.
ARTICLE 16. TERMS AND CONDITIONS. The terms and conditions of each contract of guarantee shall be determined by the Agency subject to the rules and regulations established by the Board, provided that the Agency will not cover the total loss of the guaranteed investment. Warranty contracts will be approved by the President under the direction of the Board.
ARTICLE 17. PAYMENT OF CLAIMS. The President under the direction of the Board, decide on the payment of claims to the holder of a security in accordance with the security agreement and the policies adopted by the Board. Collateral agreements require holders of guarantees, before the Agency make a payment, engage administrative resources that are appropriate under the circumstances, provided that they are readily available in accordance with the laws of the host country. Such contracts may require the course of certain reasonable periods between the occurrence of the events giving rise to claims and payments thereof.
ARTICLE 18 Subrogation.
A) Upon paying or agreeing to pay compensation to the holder of a guarantee, the Agency shall be subrogated to the rights or claims related to the guaranteed investment that the holder of a guarantee may have had against the host country and other obligors. The surety agreement shall stipulate the terms and conditions of such subrogation;
B) Rights Agency under Section a) above shall be recognized by all members;
C) The host country will amounts expressed in its own currency, acquired by the Agency as deputy under Section a) above, treatment as favorable as to use and conversion as treatment which would have corresponded such funds held by the holder of the guarantee. In any case, the Agency may use such amounts for the payment of administrative expenses and other costs. The Agency will also seek to conclude agreements with host countries on other uses of such currencies as these are not free to use.
ARTICLE 19. RELATIONS WITH NATIONAL AND REGIONAL ORGANISATIONS. The agency will cooperate with national authorities of member countries and regional entities whose capital is mostly owned by member countries that carry out similar activities of the Agency, and seek to complement the operations of such entities, to maximize both the efficiency of their respective services and their contribution to increased flows of foreign investment. To this end, the Agency may enter into contractual arrangements with such entities on the details of such cooperation, especially including the modalities of reinsurance and coinsurance.
REINSURANCE ARTICLE 20 national and regional entities.
A) The Agency may issue reinsurance in respect of a specific investment against a loss resulting from one or more of the non-commercial risks that had been guaranteed by a member or agency thereof or by a regional entity warranty investment whose larger share of capital is owned by two or more members. The Board, by special majority, from time to time determine the maximum amount of contingent liabilities that the Agency can take with respect to reinsurance contracts. With regard to specific investments which have been completed more than 12 months before the Agency receives the application for reinsurance, that maximum amount will be initially set at ten percent of the total contingent liabilities of the Agency under this Chapter. The conditions of eligibility specified in Articles 11 to 14 shall apply to reinsurance operations, except that is not necessary that the reinsured investments are carried out after the application for reinsurance.
B) mutual rights and obligations of the Agency and a member or reinsured dependence shall be specified in the reinsurance contracts subject to the rules and regulations issued by the Board reinsurance. The Board shall approve each reinsurance contract that guarantees an investment that has been made before the Agency receives an application for reinsurance in order to minimize risks, ensuring that the Agency receives premiums commensurate with their risks, and that the reinsured entity is appropriately committed to promoting new investment in developing member countries.
C) To the extent possible, the agency will ensure that he and the reinsured entity corresponding to them rights of subrogation and arbitration equivalent to those the Agency would have if it had been the original guarantor. The terms and conditions of reinsurance shall require that administrative actions willbe under Article 17 before the Agency makes a payment. Subrogation will have effect with respect to the host country concerned only after its approval of the reinsurance by the Agency. The Agency shall include in the contracts of reinsurance provisions requiring the reinsured due diligence seek to assert rights or claims related to the reinsured investment.
ARTICLE 21. COOPERATION WITH PRIVATE INSURERS and reinsurers.
A) The Agency may conclude agreements with private insurers in member countries in order to enhance its own operations and encourage such insurers to provide coverage of non-commercial risks in developing member countries on conditions similar to those applied by the Body. Such arrangements may include reinsurance by the Agency under the conditions and procedures specified in Article 20;
B) The Agency may reinsure with any appropriate reinsurance entity, in whole or in part, collateral or guarantees granted by it;
C) The Agency shall endeavor to ensure especially investments for which there are no comparable coverage from private insurers and reinsurers on reasonable terms.
ARTICLE 22. LIMITS OF WARRANTY.
A) Unless the Council decides otherwise by special majority, the total amount of contingent liability which may take the Agency under this Chapter, not at any time exceed one hundred fifty percent of the amount of free capital Agency levies and reserves plus the portion of reinsurance cover as the Board determines.
The Board, from time to time, examine the risk profile of the Agency's portfolio based on its experience with claims, degree of risk diversification, reinsurance cover and other relevant factors, in order to determine whether to recommend to the Council to amend the total maximum amount of contingent liabilities. In any case, the maximum amount determined by the Board may exceed five times the amount of duty-free capital Agency, reserves and the portion of its reinsurance coverage deemed appropriate;
B) Without prejudice to the general limit of guarantee referred to in Section a) above, the Board may determine:
i) Maximum total amounts of contingent liability which may be assumed by the Agency in accordance with this Chapter for all guarantees issued to investors of each member. In determining such maximum amounts, the Board will pay due regard to the proportional share of the respective member in the capital of the Agency and the need to apply more liberal limitations on investments originating in developing member countries, and || | ii) total maximum amounts of contingent liability which may be assumed by the Agency with respect to factors of risk, such as individual classes or risk investment projects, considered individually and recipient countries.
ARTICLE 23 INVESTMENT PROMOTION.
A) The agency will conduct research, undertake activities to promote investment flows and disseminate information on investment opportunities in developing member countries in order to improve conditions for foreign investment flows to those countries. The Agency, at the request of a member, may provide advice and technical assistance in order to improve investment conditions in the territories of that member. In performing these activities, the Agency:
i) be guided by relevant investment agreements concluded between member countries
ii) seek to remove impediments, in both developed and developing countries, to the flow of investment into developing member countries, and
iii) coordinate its activities with those of other entities interested in promoting foreign investment and in particular the International Finance Corporation;
B) In addition, the agency:
i) encourage the amicable settlement of disputes between investors and host countries,
ii) shall endeavor to conclude, subject to approval by the Board by special majority, agreements with developing member countries, especially with potential recipient countries in which it is ensured that the Agency has, with respect to investments by it guaranteed a treatment at least as favorable as that agreed by the member concerned, in agreement on investment, investment guarantee agency or State most favored, and
iii) promote and facilitate the conclusion of agreements between its members on the promotion and protection of investments;
C) The Agency will pay special attention in its advocacy of the importance of increasing the flow of investments among developing member countries.
ARTICLE 24. GUARANTEES OF SPONSORED INVESTMENTS. In addition to the guarantee operations incumbent on the Agency under this Chapter, the Agency may guarantee investments under sponsorship agreements as provided in Annex I to this Agreement.
CHAPTER IV. FINANCIAL PROVISIONS
ARTICLE 25. FINANCIAL MANAGEMENT. The Agency shall carry out its activities in accordance with sound business practices and prudent financial management practices with a view to maintaining under all circumstances its ability to meet its financial obligations.
ARTICLE 26 PREMIUMS AND COMMISSIONS. The Agency shall establish and periodically review the level of premiums, fees and other charges, if any, applicable to each class of risk.
ARTICLE 27. DISTRIBUTION OF NET REVENUES.
A) Notwithstanding the provisions of Section a) iii) of Article 10, the Agency shall allocate net income to reserves until they reach an amount equal to five times the subscribed capital of the Agency;
B) After the reserves of the Agency have reached the level prescribed in Section a) above, the Board will determine whether the Agency's net income must be allocated to reserves or distributed among the members of the Agency, and extent, or otherwise used. Any distribution of net income to members of the Agency shall be in proportion to the participation of each member in the capital of the Agency in accordance with Council Decision special majority.
ARTICLE 28. BUDGET. The President shall prepare an annual budget of income and expenditure of the Agency for approval by the Board.
ARTICLE 29. ACCOUNTS. The Agency shall publish an Annual Report which will include statements of its accounts and accounts atrocinio Trust Fund referred to in Annex I of the Convention, verified by independent auditors. The Agency shall circulate to members at appropriate intervals a summary statement of its financial position and a profit and loss account showing the results of its operations. CHAPTER V.
ORGANIZATION AND ADMINISTRATION
ARTICLE 30. STRUCTURE OF THE AGENCY. The Agency shall have a Board of Governors, a Board of Directors, a President and officials who fulfill the obligations which the Agency may determine.
ARTICLE 31. THE COUNCIL.
A) All powers of the Agency vested in the Council, except those which, according to the terms of this Convention, specifically conferred upon another organ of the Agency. The Board may delegate to the Board the exercise of any of its powers, with the following exceptions:
i) the power to admit new members and determine the conditions of admission,
ii) the power to suspend a member,
iii) the power to decide an increase or decrease of capital,
iv) the power to raise the limit on the total amount of contingent obligations under Section a) of Article 22 || | v) the power to appoint a member as a developing member country pursuant to Section c) the 3rd article
vi) the power to classify a new member as a member of the Category One or Category Two. for voting purposes pursuant to Section a) of Article 39 or reclassify an existing member for the same purposes,
vii) the power to determine the remuneration of Directors and their Alternates,
viii) the power to conclude the operations and liquidate the Agency,
ix) distribute assets to members upon liquidation, and
x) amend this Agreement, its Annexes and Appendices;
B) The Council shall consist of one Governor and one Alternate appointed by each member in the way the Council may determine. No Alternate may vote except in the absence of his principal. The Council shall select one of the Governors as its president;
C) The Council shall hold an annual meeting and such other meetings as determined by the Board or called by the Board. The Board will convene a meeting of the Council whenever it is requested by five members or by members having twenty-five percent of the total voting rights.
ARTICLE 32. THE BOARD OF DIRECTORS.
A) The Board shall be responsible for the general operations of the Agency, and in fulfilling this responsibility, take all measures required or allowed under this Convention.
B) The Board shall consist of not less than twelve Directors. The Council may adjust the number of directors to take into account changes occurring in the number of members of the Agency. Each Director may appoint an Alternate with full power to act on his behalf in his absence or disability. The President of the Bank shall be ex officio Chairman of the Board, but shall have no voting rights except as may be required in a casting vote if there is equality of outcome in a vote;
C) The Council shall determine the terms of office of the Directors. At its inaugural meeting, the Council will be the first Board;
D) The Board shall meet when convened by its Chairman, either on his own initiative or at the request of three Directors;
E) Even when the Council decides that the Agency has a resident Board working continuously, the Directors and Alternates shall receive compensation only for the cost that means attendance at Board meetings and compliance with other official functions on behalf of the Agency. Once a board is established with continuous functions, Directors and Alternates may receive remuneration determined by the Board.
ARTICLE 33. CHAIRMAN AND OFFICIALS.
A) Under the general supervision of the Board, the President will address the ordinary business of the Agency. He will be responsible for the organization and the appointment and dismissal of officials;
B) The President shall be appointed by the Board on a proposal from its chairman. The Council shall determine the remuneration and conditions of the service contract of the President;
C) In carrying out its functions, the President and officials are obliged entirely to the Agency and shall have no commitment to any other authority. Each member of the Agency shall respect the international character of this duty and shall refrain from trying to influence the President or the staff in the discharge of their duties;
D) In appointing officers and staff, the President, subject to the overriding interest of ensuring the highest standards of efficiency and technical competence, pay due attention to the importance of recruiting staff in the geographical area more broad as possible;
E) The President and the officers and employees at all times maintain the confidentiality of information obtained in the conduct of Agency operations.
ARTICLE 34. PROHIBITION
political activities. Neither the agency nor its officers to interfere in the political affairs of any member. Without prejudice to the right of the Agency to take into account all the circumstances surrounding an investment, decisions of the Agency and its officials are not influenced by the political character of the member or members concerned. Considerations relevant to their decisions shall be weighed impartially in order to achieve the purposes set forth in article 2.
ARTICLE 35. RELATIONS WITH OTHER INTERNATIONAL ORGANIZATIONS. The Agency, within the terms of this Agreement, shall cooperate with the organization of the United Nations and other intergovernmental organizations having specialized responsibilities in related fields, including in particular the Bank and the International Finance Corporation.
ARTICLE 36. LOCATION OF HEADQUARTERS.
A) The Agency's headquarters will be in Washington, DC, unless the Council, by special majority, decide to locate elsewhere;
B) The Agency may establish other offices as needed in connection with their work.
depositories of the assets. Each member shall designate its central bank as a depository in which the Agency to maintain holdings in the currency of that Member or other assets of the Agency or, in the absence of a central bank, appointed for that purpose to another institution that is acceptable to the Agency .
ARTICLE 38. COMMUNICATION WITH MEMBERS.
A) Each member shall designate an appropriate authority with which to communicate the Agency with respect to all matters arising under this Agreement. The Agency may consider as formulated by the member representations made by that authority. At the request of a member, the Agency will consult with him about matters dealt with in Articles 19 to 21 and that relate to entities or insurers of that member;
B) When it is necessary to have the approval of a member before the Agency to perform a certain action, it is considered that approval has been granted unless the member present an objection within a reasonable period as the Agency may determine to notify the member about the action envisaged.
VOTING RIGHTS ADJUSTMENTS OF SUBSCRIPTIONS AND REPRESENTATION
ARTICLE 39. VOTING RIGHTS AND ADJUSTMENTS OF SUBSCRIPTIONS.
A) In order to provide voting arrangements that reflect the equal interest in the Agency of the two categories of States listed in Appendix A to this Agreement, and the importance of financial participation of each of the members, each member shall have 177 membership votes plus one subscription vote for each share that member has in the capital;
B) If at any time within three years after the entry into force of this Convention the total sum of the votes of membership and subscription members belonging to either of the two categories of States contained in the Appendix a of this Agreement is less than forty percent of total voting rights, members of the category in question have a number of additional votes necessary for the total voting rights of the category is equal to such percentage of total voting rights. Supplementary votes shall be distributed among the members of that category in the proportion that the subscription votes of each bears to the total votes of subscription category. Such supplementary votes shall be subject to automatic adjustment to ensure that such percentage is maintained and shall be canceled at the end of said period of three years;
C) During the third year following the entry into force of this Agreement, the Council shall review the allocation of shares and shall be guided in its decision by the following principles:
i) the votes of members shall reflect subscriptions effective in the capital of the Agency and the membership votes as stated in Section a) of this article,
ii) shares allocated to countries which have not signed the Convention shall be made available to members by the end of and reallocation so as to make possible voting parity between the above two categories, and
iii) the Council will take the measures that facilitate the subscription by members of the shares allocated to them;
D) Within the three-year period stipulated in Section b) of this Article, all decisions of the Council and Board shall be taken by special majority, except that decisions requiring a higher majority under this agreement shall be taken by such higher majority;
E) If the share capital increase of the Agency in accordance with Section c) of Article 5. Each member who so requests shall be authorized to subscribe a proportion of the increase equivalent to the proportion who keep their shares subscribed until then the total capital stock of the Agency, but no member shall be obligated to subscribe to any part of the capital increase;
F) The Council shall issue regulations concerning additional subscriptions trying Section e) of this article. Such regulations shall prescribe reasonable time limits for the filing of the members to make such subscriptions.
ARTICLE 40. VOTING IN THE COUNCIL.
A) Each Governor shall be entitled to cast the votes of the member he represents. Unless otherwise specified in this Agreement, the Council's decisions are taken by majority of the votes cast;
B) For any meeting of the Board the quorum shall consist of the majority of the Governors exercising not less than two thirds of the voting rights;
C) The Council may by regulation establish a procedure whereby the Board may request a Council decision on a specific question without meeting the Council if it considers such action to be in the best interests of the Agency.
ARTICLE 41. ELECTION OF DIRECTORS.
A) The Directors shall be elected in accordance with Appendix B;
B) Directors shall continue in office until their successors. If the office of a Director becomes vacant more than ninety days before the end of his term, the Governors who elected that Director will choose another for the rest of the period. Choice for the majority of votes cast is required. While the office remains vacant, the Alternate of the former Director shall exercise his powers, except that of appointing an alternate.
ARTICLE 42. VOTING IN THE BOARD OF DIRECTORS.
A) Each Director shall be entitled to cast the number of votes of the members whose votes counted for their choice. All the votes which a Director is entitled to cast shall be cast as a unit. Unless otherwise specified in this Agreement, decisions of the Board shall be taken by a majority of the votes cast;
B) The quorum for a meeting of the Board shall consist of the majority of directors who have no less than half of the total voting rights;
C) The Board may by regulation establish a procedure whereby the Chairman may seek a decision of the Board on a specific question without meeting of the Board when it considers that such action to be in the best interests of the Agency .
Privileges and Immunities
ARTICLE 43. PURPOSE OF CHAPTER. In order to enable the Agency to fulfill its functions, you will be granted in the territory of each Member such privileges and immunities set forth in this Chapter.