ASIAN DEVELOPMENT BANK AGREEMENT
(RATIFICATION) ACT

Arrangement of Sections

1. Short title.

2. Authorisation of ratification or acceptance of the Agreement establishing the Asian Development Bank.

3. Status, immunities, exemptions, and privileges accorded to the Bank in Sri Lanka.

4. Payments out of the Consolidated Fund.

5. Issue of Government notes or obligations to the Central Bank of Ceylon.

6. Receipts.

7. Power of the Minister to make Orders.

SCHEDULES

AN ACT to enable Ceylon to become a member of the Asian Development Bank authorising the ratification or acceptance by Ceylon of the agreement, establishing that bank, to which Ceylon is a signatory.

21 of 1966.

[Date of Commencement: 24th September, 1966]

1. Short title.

This Act may be cited as the Asian Development Bank Agreement (Ratification) Act.

2. Authorisation of ratification or acceptance of the Agreement establishing the Asian Development Bank.

The Governor-General1 is hereby empowered by instruments under his hand to authorise such person as may be named in the instrument, on behalf of the Government of Ceylon,

(a) to ratify or accept the Agreement establishing the Asian Development Bank, in this Act referred to as "the Agreement” and ”the Bank” respectively, to which Ceylon is a signatory and which is set out in the Schedule to this Act; and

(b) to deposit with the Secretary-General of the United Nations an instrument of such ratification or acceptance stating that the Government has accepted the Articles of the Agreement without reservation in accordance with the law of Ceylon and has taken all steps to enable the Government to carry out all the obligations of the Government under the said Articles in order that Ceylon which is entitled to be an original member of the Bank by virtue of Article 64 of, and Annex A to, the said Articles may accept membership in the Bank.

3. Status, immunities, exemptions, and privileges accorded to the Bank in Sri Lanka.

The provisions of Chapter VIII of the Agreement shall have the force of law in Sri Lanka, and accordingly the Bank shall have in Sri Lanka the status, immunities, exemptions and privileges specified in the said Chapter VIII.

4. Payments out of the Consolidated Fund.

There shall be paid out of the Consolidated Fund such sums as are payable, or may, from time to time, become payable, to the Bank by the Government of Sri Lanka under the Articles of the Agreement.

5. Issue of Government notes or obligations to the Central Bank of Ceylon.

(1) For the purpose of providing any sums required to be paid out of the Consolidated Fund under section 4, the Minister in charge of the subject of Finance is hereby authorised to raise loans, on behalf of the Government of Sri Lanka, by the creation and issue to the Central Bank of Ceylon, in such form as he thinks fit, of non-interest bearing and non-negotiable notes or obligations.

(2) Notwithstanding anything in the Monetary Law Act, the Central Bank of Ceylon is hereby authorised to accept and hold any notes or obligations created and issued in accordance with the provisions of subsection (1) of this section.

(3) There shall be paid out of the Consolidated Fund all sums required for the redemption of any notes or obligations created and issued to the Central Bank of Ceylon under subsection (1) of this section.

6. Receipts.

All sums received by or on behalf of the Government of Sri Lanka from the Bank under the Articles of the Agreement shall be paid into the Consolidated Fund, and the sums so received, in so far as they represent capital, shall, unless otherwise provided in that behalf under any written law, be applied from time to time as the Minister in charge of the subject of Finance may direct in the redemption of notes or other obligations issued to the Central Bank of Ceylon under this Act.

7. Power of the Minister to make Orders.

(1) The Minister in charge of the subject of Finance may, by Order published in the Gazette, make such other provision as he may consider reasonably necessary for carrying into effect any of the provisions of the Articles of the Agreement, and every Order made under this subsection and so published shall be laid before Parliament at the earliest possible opportunity and shall have the force of law unless disapproved within one month.

(2) The Minister in charge of the subject of Finance may take all such steps, and make all such arrangements, as he may consider reasonably necessary to enable the Government of Sri Lanka to meet or discharge its financial obligations or liabilities under the Articles of the Agreement.

SCHEDULE

[SECTION 2]

AGREEMENT ESTABLISHING THE ASIAN DEVELOPMENT BANK THE CONTRACTING PARTIES

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

Realising the significance of making additional development financing available for the region by mobilising such funds and other resources both from within and outside the region, and by seeking to create and foster conditions conducive to increased domestic savings and greater flow of development funds into the region;

Recognising the desirability of promoting the harmonious growth of the economies of the region and the expansion of external trade of member countries;

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

Have Agreed to establish hereby the Asian Development Bank (hereinafter called the "Bank”) which shall operate in accordance with the following.

ARTICLES OF AGREEMENT

Chapter I

PURPOSE FUNCTIONS AND MEMBERSHIP

ARTICLE I

PURPOSE

The purpose of the Bank shall be to foster economic growth and co-operation in the region of Asia and the Far East (hereinafter referred to as the "region”) and to contribute to the acceleration of the process of economic development of the developing member countries in the region, collectively and individually. Wherever used in this Agreement, the terms ”region of Asia and the Far East” and "region” shall comprise the territories of Asia and the Far East included in the Terms of Reference of the United Nations Economic Commission for Asia and the Far East.

ARTICLE 2

FUNCTIONS

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

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

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

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

(iv) to provide technical assistance for the preparation, financing and execution of development projects and programmes, including the formulation of specific project proposals;

(v) to co-operate, in such manner as the Bank may deem appropriate, within the terms of this Agreement, with the United Nations, its organs and subsidiary bodies including, in particular, the Economic Commission for Asia and the Far East, and with public international organisations and other international institutions, as well as national entities whether public or private, which are concerned with the investment of development funds in the region, and to interest such institutions and entities in new Opportunities for investment and assistance; and

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

ARTICLE 3

MEMBERSHIP

1. Membership in the Bank shall be open to—

(i) members and associate members of the United Nations Economic Commission for Asia and the Far East; and

(ii) other regional countries and non-regional developed countries which are members of the United Nations or of any of its specialised agencies.

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

3. In the case of associate members of the United Nations Economic Commission for Asia and the Far East which are not responsible for the conduct of their international relations, application for membership in the Bank shall be presented by the member of the Bank responsible for the international relations of the applicant and accompanied by an undertaking by such member that, until the applicant itself assumes such responsibility, the member shall be responsible for all obligations that may be incurred by the applicant by reason of admission to membership in the Bank and enjoyment of the benefits of such membership. "Country” as used in this Agreement shall include a territory which is an associate member of the United Nations Economic Commission for Asia and the Far East.

Chapter II

CAPITAL

ARTICLE 4

AUTHORISED CAPITAL

1. The authorised capital stock of the Bank shall be one billion dollars ($ 1,000.000,000) in terms of United States dollars of the weight and fineness in effect on 31 January. 1966. The dollar wherever referred to in this Agreement shall be understood as being a United States dollar of the above value. The authorised capital stock shall be divided into one hundred thousand (100,000) shares having a par value often thousand dollars ($ 10,000) each, which shall be available for subscription only by members in accordance with the provisions of Article 5 of this Agreement.

2. The original authorised capital stock shall be divided into paid-in shares and callable shares. Shares having an aggregate par value of five hundred million dollars ($ 500,000,000) shall be paid-in shares, and shares having an aggregate par value of five hundred million dollars ($ 500,000,000) shall be callable shares.

3. The authorised capital stock of the Bank may be increased by the Board of Governors, at such time and under such terms and conditions as it may deem advisable, by a vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of the members.

ARTICLE 5

SUBSCRIPTION OF SHARES

1. Each member shall subscribe to shares of the capital stock of the Bank. Each subscription to the original authorised capital stock shall be for paid-in shares and callable shares in equal parts. The initial number of shares to be subscribed by countries which become members in accordance with Article 64 of this Agreement shall be that set forth in Annex A hereof. The initial number of shares to be subscribed by countries which are admitted to membership in accordance with paragraph 2 of Article 3 of this Agreement shall be determined by the Board of Governors; provided, however, that no such subscription shall be authorised which would have the effect of reducing the percentage of capital stock held by regional member below sixty (60) percent of the total subscribed capital stock.

2. The Board of Governors shall at intervals of not less than five (5) years review the capital stock of the Bank. In case of an increase in the authorised capital stock, each member shall have a reasonable opportunity to subscribe, under such terms and conditions as the Board of Governors shall determine, to a proportion of the increase of stock equivalent to the proportion which its stock therefor subscribed bears to the total subscribed capital stock immediately prior to such increase; provided, however, that the foregoing provision shall not apply in respect of any increase or portion of an increase in the authorised capital stock intended solely to give effect to determinations of the Board of Governors under paragraphs I and 3 of this Article. No member shall be obligated to subscribe to any part of an increase of capital stock.

3. The Board of Governors may, at the request of a member, increase the subscription of such member on such terms and conditions as the Board may determine; provided, however, that no such increase in the subscription of any member shall be authorised which would have the effect of reducing the percentage of capital stock held by regional members below sixty (60) percent of the total subscribed capital stock. The Board of Governors shall pay special regard to the request of any regional member having less than six (6) percent of the subscribed capital stock to increase its proportionate share thereof.

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

5. Shares of stock shall not be pledged or encumbered in any manner whatsoever, and they shall not be transferable except to the Bank in accordance with Chapter VII of this Agreement.

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

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

ARTICLE 6

PAYMENT OF SUBSCRIPTIONS

1. Payment of the amount initially subscribed by each Signatory to this Agreement which becomes a member in accordance with Article 64 to the paid-in capital stock of the Bank shall be made in five (5) instalments, of twenty (20) percent each of such amount. The first instalment shall be paid by each member within thirty (30) days after entry into force of this Agreement, or on or before the date of deposit on its behalf of its instrument of ratification or acceptance in accordance with paragraph 1 of Article 64, whichever is later. The second instalment shall become due one (1) year from the entry into force of this Agreement. The remaining three instalments shall each become due successively one (1) year from the date on which the preceding instalment becomes due.

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

(a) fifty (50) percent shall be paid in gold or convertible currency; and

(b) fifty (50) percent in the currency of the member.

3. The Bank shall accept from any member promissory notes or other obligations issued by the Government of the member, or by the depository designated by such member, in lieu of the amount to be paid in the currency of the member pursuant to paragraph 2(b) of this Article, provided such currency is not required by the Bank for the conduct of its operations. Such notes or obligations shall be non-negotiable, non-interest-bearing, and payable to the Bank at par value upon demand. Subject to the provisions of paragraph 2(ii) of Article 24, demands upon such notes or obligations payable in convertible currencies shall, over reasonable periods of time, be uniform in percentage on all such notes or obligations.

4. Each payment of a member in its own currency under paragraph 2(a) of this Article shall be in such amount as the Bank, after such consultation with the International Monetary Fund as the Bank may consider necessary and utilising the par value established with the International Monetary Fund, if any, determines to be equivalent to the full value in terms of dollars of the portion of the subscription being paid. The initial payment shall be in such amount as the member considers appropriate hereunder but shall be subject to such adjustment, to be effected within ninety (90) days of the date on which such payment was due, as the Bank shall determine to be necessary to constitute the full dollar equivalent of such payment.

5. Payment of the amount subscribed to the callable capital stock of the Bank shall be subject to call only as and when required by the Bank to meet its obligations incurred under sub-paragraphs (ii) and (iv) of Article 11 on borrowings of funds for inclusion in its ordinary capital resources or on guarantees chargeable to such resources.

6. In the event of the call referred to in paragraph 5 of this Article, payment may be made at the option of the member in gold, convertible currency or in the currency required to discharge the obligations of the Bank for the purpose of which the call is made. Calls on unpaid subscriptions shall be uniform in percentage on all callable shares.

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

ARTICLE 7

ORDINARY CAPITAL RESOURCES

As used in this Agreement, the terra "ordinary capital resources” of the Bank shall include the following—

(i) authorised capital stock of the Bank, including both paid-in and callable shares, subscribed pursuant to Article 5 of this Agreement, except such part thereof as may be set aside into one or more Special Funds in accordance with paragraph 1(i) of Article 19 of this Agreement;

(ii) funds raised by borrowings of the Bank by virtue of powers conferred by sub-paragraph (i) of Article 21 of this Agreement, to which the commitment to calls provided for in paragraph 5 of Article 6 of this Agreement is applicable;

(iii) funds received in repayment of loans or guarantees made with the resources indicated in (i) and (ii) of this Article;

(iv) income derived from loans made from the aforementioned funds or from guarantees to which the commitment to calls set forth in paragraph 5 of Article 6 of this Agreement is applicable; and

(v) any other funds or income received by the Bank which do not form part of its Special Funds resources referred to in Article 20 of this Agreement.

Chapter III

OPERATIONS

ARTICLE 8

USE OF RESOURCES

The resources and facilities of the Bank shall be used exclusively to implement the purpose and functions set forth respectively in Articles 1 and 2 of this Agreement.

ARTICLE 9

ORDINARY AND SPECIAL OPERATIONS

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

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

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

ARTICLE 10

SEPARATION OF OPERATIONS

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

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

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

ARTICLE 11

RECIPIENTS AND METHODS OF OPERATION

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

(i) by making or participating in direct loans with its unimpaired paid-in capital and, except as provided in Article 17 of this Agreement, with its reserves and undisturbed surplus; or with the unimpaired Special Funds resources;

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

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

(iv) by guaranteeing, whether as primary or secondary obligor, in whole or in part, loans for economic development participated in by the Bank.

ARTICLE 12

LIMITATIONS ON ORDINARY OPERATIONS

1. The total amount outstanding of loans, equity investments and guarantees made by the Bank in its ordinary operations shall not at any time exceed the total amount of its unimpaired subscribed capital, reserves and surplus included in its ordinary capital resources, exclusive of the special reserve provided for by Article 17 of this Agreement and other reserves not available for ordinary operations.

2. In the case of loans made with funds borrowed by the Bank to which the commitment to calls provided for by paragraph 5 of Article 6 of this Agreement is applicable, the total amount of principal outstanding and payable to the Bank in a specific currency shall not at any time exceed the total amount of the principal of outstanding borrowings by the Bank that are payable in the same currency.

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