INTERNATIONAL FINANCE CORPORATION AGREEMENT ACT

Arrangement of Sections

1. Short title.

2. Authorisation of signature of Articles of Agreement of the International Finance Corporation.

3. Subscription to the corporation.

3A. Increase of subscription.

4. Status, immunities and privilege accorded in Sri Lanka to the Corporation.

5. Orders for carrying the Articles into effect.

SCHEDULE

28 of 1978.

4 of 1956.

AN ACT to enable Ceylon to become a member of the International Finance Corporation.

[Date of Commencement: 2nd February, 1956]

1. Short title.

This Act may be cited as the International Finance Corporation Agreement Act.

2. Authorisation of signature of Articles of Agreement of the International Finance Corporation.

The Governor–General is hereby authorised by instrument under his hand to empower such person as may be named in the instrument, on behalf of the Government of Sri Lanka—

(a) to sign the Articles of Agreement (hereinafter referred to as "the Articles”) of the International Finance Corporation (hereinafter referred to as ”the Corporation”) which are set out in the Schedule to this Act, and

(b) to deposit with the International Bank for Reconstruction and Development (hereinafter referred to as "the Bank”) an instrument stating that the Government of Sri Lanka (hereinafter referred to as ”the Government”) has accepted the Articles without reservation in accordance with the law of Sri Lanka and has taken all steps necessary to enable the Government to carry out all the obligations of the Government under the Articles, in order that Sri Lanka, which is entitled to be an original member of the Corporation by virtue of Section 1(a) of Article II of the Articles and Schedule A to the Articles, may accept membership in the Corporation on or before the date specified in Section 2(c) of Article IX of the Articles.

3. Subscription to the corporation.

There shall be paid out of the Consolidated Fund of Sri Lanka such sum as may be required to pay to the Corporation 166,000 United States dollars as subscription to 166 shares of stock of the Corporation which are the number of shares to which Sri Lanka is entitled to subscribe by virtue of Section 3(a) of Article II of the Articles and Schedule A to the Articles.

3A. Increase of subscription.

Where the authorised capital stock of the Corporation is increased in pursuance of sub–paragraph (ii) of paragraph (c) of Section 2 of Article II of the Articles and Sri Lanka decides to subscribe such proportion of the increase of that capital stock as Sri Lanka is entitled to subscribe under paragraph (d) of Section 2 of Article II of the Articles, there shall be paid out of the Consolidated Fund of Sri Lanka such sum as may be necessary for making such subscription in accordance with such conditions as may be decided by the Corporation under the aforesaid paragraph (d).

[S 3A ins by s 2 of Law 28 of 1978.]

4. Status, immunities and privilege accorded in Sri Lanka to the Corporation.

The provisions of Sections 2 to 9 and Section 11 of Article VI of the Articles shall have the force of law in Sri Lanka, and accordingly the Corporation—

(a) shall have in Sri Lanka the status and capacity specified in Section 2 of the said Article VI, and

(b) shall, subject to the provisions of Section 11 of the said Article VI, have in Sri Lanka the immunities and privileges specified in Sections 3 to 9 of the said Article VI.

5. Orders for carrying the Articles into effect.

The President 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, and every Order made under this section and so published shall have the force of law.

SCHEDULE

[Section 2]

ARTICLES OF AGREEMENT OF THE INTERNATIONAL FINANCE CORPORATION

The Governments on whose behalf this Agreement is signed agree as follows—

INTRODUCTORY ARTICLE

The International Finance Corporation (hereinafter called the Corporation) is established and shall operate in accordance with the following provisions—

ARTICLE I

PURPOSE

The purpose of the Corporation is to further economic development by encouraging the growth of productive private enterprise in member countries, particularly in the less developed areas, thus supplementing the activities of the International Bank for Reconstruction and Development (hereinafter called the Bank). In carrying out this purpose, the Corporation shall—

(i) in association with private investors, assist in financing the establishment, improvement and expansion of productive private enterprises which would contribute to the development of its member countries by making investments, without guarantee of repayment by the member government concerned, in cases where sufficient private capital is not available on reasonable terms;

(ii) seek to bring together investment opportunities, domestic and foreign private capital, and experienced management; and

(iii) seek to stimulate, and to help create conditions conducive to, the How of private capital, domestic and foreign, into productive investment in member countries.

The Corporation shall be guided in all its decisions by the provisions of this Article.

ARTICLE II

MEMBERSHIP AND CAPITAL

SECTION 1–Membership—

(a) The original members of the Corporation shall be those members of the Bank listed in Schedule A hereto which shall, on or before the date specified in Article IX, Section 2(c), accept membership in the Corporation.

(b) Membership shall be open to other members of the Bank at such times and in accordance with such terms as may be prescribed by the Corporation.

SECTION 2–Capital Stock—

(a) The authorised capital stock of the Corporation shall be $100,000,000, in terms of United States dollars.

(b) The authorised capital stock shall be divided into 100,000 shares having a part value of one thousand United States dollars each. Any such shares not initially subscribed by original members shall be available for subsequent subscription in accordance with Section 3(d) of this Article.

(c) The amount of capital stock at any time authorised may be increased by the Board of Governors as follows—

(i) by a majority of the votes cast, in case such increase is necessary for the purpose of issuing shares of capital stock on initial subscription by members other than original members, provided that the aggregate of any increases authorised pursuant to this sub–paragraph shall not exceed 10,000 shares;

(ii) in any other case, by a three-fourths majority of the total voting power.

(d) In case of an increase authorised pursuant to paragraph (c)(ii) above, each member shall have a reasonable opportunity to subscribe, under such conditions as the Corporation shall decide, to a proportion of the increase of stock equivalent to the proportion which its stock theretofore subscribed bears to the total capital stock of the Corporation, but no member shall be obligated to subscribe to any part of the increased capital.

(e) Issuance of shares of stock, other than those subscribed either on initial subscription or pursuant to paragraph (d) above, shall require a three-fourths majority of the total voting power.

(f) Shares of stock of the Corporation shall be available for subscription only by, and shall be issued only to members.

SECTION 3–Subscriptions—

(a) Each original member shall subscribe to the number of shares of stock set forth opposite its name in Schedule A. The number of shares of stock to be subscribed by other members shall be determined by the Corporation.

(b) Shares of stock initially subscribed by original members shall be issued at par.

(c) The initial subscription of each original member shall be payable in full within 30 days after either the date on which the Corporation shall begin operations pursuant to Article IX, Section 3(b), or the date on which such original member becomes a member, whichever shall be later, or at such date thereafter as the Corporation shall determine. Payment shall be made in gold or United States dollars in response to a call by the Corporation which shall specify the place or places of payment.

(d) The price and other terms of subscription of shares of stock to be subscribed, otherwise than on initial subscription by original members, shall be determined by the Corporation.

SECTION 4–Limitation on Liability No member shall be liable, by reason of its membership, for obligations of the Corporation.

SECTION 5–Restriction on Transfers and Pledges of Shares.

Shares of stock shall not be pledged or encumbered in any manner whatever, and shall be transferable only to the Corporation.

ARTICLE III

OPERATIONS

SECTION 1–Financing Operations.

The Corporation may make investments of its funds in productive private enterprises in the territories of its members. The existence of a government or other public Interest in such an enterprise shall not necessarily preclude the Corporation from making an investment therein.

SECTION 2–Forms of Financing—

(a) The Corporation's financing shall not take the form of investments in capital stock–Subject to the foregoing, the Corporation may make investments of its funds in such form or forms as it may deem appropriate in the circumstances, including (but without limitation) investments according to the holder thereof the right to participate in earnings and the right to subscribe to, or to convert the investment into, capital stock.

(b) The Corporation shall not itself exercise any right to subscribe to, or to convert any investment into, capital stock.

SECTION 3–Operational Principles The operations of the Corporation shall be conducted in accordance with the following principles—

(i) the Corporation shall not undertake any financing for which in its opinion sufficient private capital could be obtained on reasonable terms;

(ii) the Corporation shall not finance an enterprise in the territories of any member if the member objects to such financing;

(iii) the Corporation shall impose no conditions that the proceeds of any financing by it shall be spent in the territories of any particular country;

(iv) the Corporation shall not assume responsibility for managing any enterprise in which it has invested;

(v) the Corporation shall undertake its financing on terms and conditions which it considers appropriate, taking into account the requirements of the enterprise, the risks being undertaken by the Corporation and the terms and conditions normally obtained by private investors for similar financing;

(vi) the Corporation shall seek to revolve its funds by selling its investments to private investors whenever it can appropriately do so on satisfactory terms;

(vii) the Corporation shall seek to maintain a reasonable diversification in its investments.

SECTION 4–Protection of Interests.

Nothing in this Agreement shall prevent the Corporation, in the event of actual or threatened default on any of its investments, actual or threatened insolvency of the enterprise in which such investment shall have been made, or other situations which, in the opinion of the Corporation, threaten to jeopardize such investment, from taking such action and exercising such rights as it may deem necessary for the protection of its interests.

SECTION 5–Applicability of certain Foreign Exchange Restrictions.

Funds received by or payable to the Corporation in respect of an investment of the Corporation made in any member's territories pursuant to Section 1 of this Article shall not be free, solely by reason of any provision of this Agreement, from generally applicable foreign exchange restrictions, regulations and controls in force in the territories of that member.

SECTION 6–Miscellaneous Operations In addition to the operations specified elsewhere in this Agreement, the Corporation shall have the power to—

(i) borrow funds, and in that connection to furnish such collateral or other security therefor as it shall determine; provided, however, that before making a public sale of its obligations in the markets of a member, the Corporation shall have obtained the approval of that member and of the member in whose currency the obligations are to be denominated;

(ii) invest funds not needed in its financing operations in such obligations as it may determine and invest funds held by it for pension or similar purposes in any marketable securities, all without being subject to the restrictions imposed by other Sections of this Article;

(iii) guarantee securities in which it has invested in order to facilitate their sale;

(iv) buy and sell securities it has issued or guaranteed or in which it has invested;

(iv) exercise such other powers incidental to its business as shall be necessary or desirable in furtherance of its purposes.

SECTION 7–Valuation of Currencies.

Whenever it shall become necessary under this Agreement to value any currency in terms of the value of another currency, such valuation shall be as reasonably determined by the Corporation after consultation with the International Monetary Fund.

SECTION 8–Warning to be Placed on Securities.

Every security issued or guaranteed by the Corporation shall bear on its face a conspicuous statement to the effect that it is not an obligation of the Bank or, unless expressly stated on the security, of any government.

SECTION 9–Political Activity Prohibited.

This section of the article is only available for our subscribers. Please click here to subscribe to a subscription plan to view this part of the article.


Recent Updates

LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


LAW COMMISSION (AMENDMENT) ACT, NO. 19 OF 2016


VALUE ADDED TAX (AMENDMENT) ACT, NO. 20 OF 2016


PORTS AND AIRPORTS DEVELOPMENT LEVY (AMENDMENT) ACT, NO. 21 OF 2016


NATION BUILDING TAX (AMENDMENT) ACT, NO. 22 OF 2016


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015