930-(5)

II SÉRIE-A — NÚMERO 33

sector enterprises and such state-owned enterprises referred to in b) above for the ends mentioned in that subparagraph;

///') By facilitating access to domestic and international capital markets by private sector enterprises or by other enterprises referred to in sub-paragraph /) of this paragraph for the ends mentioned in that sub-paragraph, through the provision of guarantees, where other means of financing are not appropriate, and through financial advice and other forms of assistance;

iv) By deploying special funds resources in accordance with the agreements determining their use; and

v) By making or participating in loans and providing technical assistance for the reconstruction or development of infrastructure including environmental programmes, necessary for private sector development and the transition to a market-oriented economy.

For the purposes of this paragraph, a state-owned enterprise shall not be regarded as operating competitively unless it operates autonomously in a competitive market environment and unless it is subject to bankruptcy laws.

2 — /) The board of directors shall review at least annually the Bank's operations and lending strategy in each recipient country to ensure that the purpose and the functions of the Bank, as set out in articles 1 and 2 of this Agreement, are fully served. Any decision pursuant to such a review shall be taken by a majority of not less than two-thirds of the directors, representing not less than three-fourths of the total voting power of the members.

//) The said review shall involve the consideration of, inter alia, each recipient country's progress made on decentralization, demonopolization and privatization and the relative shares of the Bank's lending to private enterprises, to state-owned enterprises in the process of transition to participation in the market-oriented economy or privatization, for infrastructure, for technical assistance, and for other purposes.

3 — i) Not more than forty (40) per cent of the amount of the Bank's total committed loans, guarantees and equity investments, without prejudice to its other operations referred to in this article, shall be provided to the state sector. Such percentage limit shall apply initially over a two (2) year period, from the date of commencement of the Bank's operations, taking one year with another, and thereafter in respect of each subsequent financial year.

//) For any country, not more than forty (40) per cent of the amount of the Bank's total committed loans, guarantees and equity investments over a period of five (5) years, taking one year with another, and without prejudice to the Bank's other operations referred to in this article, shall be provided to the state sector.

Hi) For the purposes of this paragraph:

a) The state sector includes national and local governments, their agencies, and enterprises owned or controlled by any of them;

b) A loan or guarantee to, or equity investment in, a state-owned enterprise which is implementing a programme to achieve private ownership and control shall not be considered as made to the state sector;

c) Loans to a financial intermediary for onlending to the private sector shall not be considered as made to the state sector.

Article 12 Limitations on ordinary operations

1 — The total amount of outstanding loans, equity investments and guarantees made by the Bank in its ordinary operations shall not be increased at any time, if by such increase the total amount of its unimpaired subscribed capital, reserves and surpluses included in its ordinary capital resources would be exceeded.

2 — The amount of any equity investment shall not normally exceed such percentage of the equity capital of the enterprise concerned as shall be determined, by a general rule, to be appropriate by the board of directors. The Bank shall not seek to obtain by such an investment a controlling interest in the enterprise concerned and shall not exercise such control or assume direct responsibility for managing any enterprise in which it has an investment, except 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 Bank, threaten to jeopardize such investment, in which case the Bank may take such action and exercise such rights as it may deem necessary for the protection of its interests.

3 — The amount of the Bank's disbursed equity investments shall not at any time exceed an amount corresponding to its total unimpaired paid-in subscribed capital, surpluses and general reserve.

4 — The Bank shall not issue guarantees for export credits nor undertake insurance activities.

Article 13

Operating principles

The Bank shall operate in accordance with the following principles:

/') The Bank shall apply sound banking principles to all its operations;

ii) The operations of the Bank shall provide for the financing of specific projects whether individual or in the context of specific investment programmes, and for technical assistance, designed to fulfil its purpose and functions as set out in articles 1 and 2 of this Agreement;

Hi) The Bank shall not finance any undertaking in the territory of a member if that member objects to such financing;

;'v) The Bank shall not allow a disproportionate amount of its resources to be used for the benefit of any member; v) The Bank shall seek to maintain reasonable diversification in all its investments;