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II SÉRIE — NÚMERO 29

i) The Bank shall seek to maintain a reasonable diversification in its investments in equity capital;

/) The Bank shall apply sound banking principles to its operations and, in particular, to its investments in equity capital. It shall not assume responsability for managing any institution or undertaking in which it has an investment; and

k) In guaranteeing a loan made by other investors, the Bank shall receive suitable compen-station for its risk.

2 — The Bank shall adopt such rules and regulations as are required for the consideration of projects submitted to it.

Article 18

Terms and conditions for direct loans and guarantees

1 — In the case of direct loans made by the Bank, the contract:

a) Shall establish, in conformity with the opera-

tional principles set forth in paragraph 1 of article 17 of this Agreement and suject to other provisions of this chapter, all the terms and conditions for the loan concerned, including those relating to amortization, interest and other charges, and to maturities and dates of payment; and, in particular;

b) Shall provide that —subject to paragraph 3,

c), of this article— payments to the Bank of amortization, interest, commission and other charges shall be made in the currency loaned, unless —in the case of a direct loan made as part of special operations — the rules and regulations provide otherwise.

2 — In the case of loans guaranteed by the Bank, the contract of guarantee:

a) Shall establish, in conformity with the opera-

tional principles set forth in paragraph 1 of article 17 of this Agreement and suject to the other provisions of this chapter, all the terms and conditions of the guarantee concerned including those relating to the fees, commission, and other charges of the Bank; and, in particular;

b) Shall provide that —subject to paragraph 3,

c), of this article— all payments to the Bank under the guarantee contract shall be made in the currency loaned, unless —in the case of a loan guaranteed as part of special operations — the rules and regulations provide otherwise; and

c) Shall also provide that the Bank may terminate

its liability with respect to interest if, upon default by the borrower and the guarantor, if any, the Bank offers to purchase, at par and interest accrued to a date designated in the offer, the bonds or other obligations guaranteed.

3 — Jn the case of direct loans made or loans guaranteed by the Bank, the Bank:

a) In determining the terms and conditions for

the operation, shall take due account of the terms and conditions on which the corresponding funds were obtained by the Bank;

b) Where the recipient is not a member, may,

when it deems it advisable, require that the member in whose territory the project concerned is to be carried out, or a public agency or institution of that member acceptable to the Bank, guarantee the repayment of the principal and the payment of interest and other charges on the loan;

c) Shall expressly state the currency in which

all payments to the Bank under the contract concerned shall be made. At the option of the borrower, however, such payments may always be made in gold or convertible currency or, suject to the agreement of the Bank, in any other currency; and

d) May attach such other terms or conditions,

as it deems appropriate, taking into account both the interest of the member directly concerned in the project and the interest of the members as a whole.

Article 19 Commission and fees

1 — The Bank shall charge a commission on direct ioans made and guarantees given as part of its ordinary operations. This commission, payable periodically, shall be computed on the amount outstanding on each loan or guarantee and shall be at the rate of not less than one per cent per annum, unless the Bank, after the first ten years of its operations, decides to change this minimum rate by a majority of two-thirds of its members representing not less than three-quarters of the total voting power of the members.

2 — In guaranteeing a loan as part of its ordinary operations, the Bank shall charge a guarantee fee, at a rate determinated by the Board of Directors, payable periodically on the amount of the loan outstanding.

3 — Other charges of the Bank in its ordinary operations and the commission, fees and other charges in its special operations shall be determined by the Board of Directors.

Article 20

Special reserve

The amount of commissions received by the Bank pursuant to article 19 of this Agreement shall be set aside as a special reserve which shall be kept for meeting liabilities of the Bank in accordance with its article 21. The special reserve shall be held in such liquid form, permitted under this Agreement, as the Board of Directors may decide.