1. All the powers of the Bank shall be vested in the Board of Governors.
2. The Board of Governors may delegate to the Board of Directors any or all of its powers, except the power to:
1. increase or decrease the authorized capital of the Bank,
2. admit new members and determine conditions of their admissions,
3. decide on interpretation or applications of this Agreement as may be requested by the Board of Directors or otherwise,
4. authorize the conclusion of agreement for cooperation with other international organizations,
5. elect the President of the Bank,
6. determine the remuneration of the Directors and the salary and other terms of the contract of services of the President,
7. approve, after reviewing the auditors’ report, the balance sheet and the statement of profit and loss of the Bank,
8. determine the reserves and distribution of the profit of the Bank,
9. amend this Agreement upon the proposal made by the Board of Directors or by a member,
10. decide to terminate the operations of the Bank and to distribute its assets,
11. exercise such other special powers as are expressly assigned to the Board of Governors in this Agreement or any other matter referred to it by the Board of Directors.
3. The Board of Governors, and the Directors to the extent authorized, may adopt such rules and regulations as may be necessary or appropriate to conduct the business of the Bank, including rules and regulations for personnel pensions and other benefits.
4. The Board of Governors shall retain full power to exercise authority over any matter delegated to the Board of Directors under paragraph 2 and 3 of this Article.
Board of Governors: Procedure
1. The Board of Governors shall hold an annual meeting and such other meetings deemed necessary by the Board or called by the Board of Directors. Meetings of the Board of Governors shall be called by the Board of Directors whenever requested by the Board or any one Governor, representing a Founding Member.
2. The quorum for any meeting of the Board of Governors shall be simple majority of the Governors with all the three of the Governors representing ECO Founding Members present and in the absence of any Governor by his Alternate Governor.
3. The Board of Governors shall, establish a procedure whereby the Board of Directors may, when the latter deems such an action advisable, obtain a vote of the Governors on a specific question without calling a meeting of the Board of Governors.
Board of Directors
1. The Board of Directors shall consist of not more than six Directors and six Alternate Directors. Each ECO Founding Member shall appoint one Director and one Alternate Director. Other members representing at least 15 percent of the voting rights or, such other minimum rights as may be decided by the Board of Governors, shall be entitled to appoint one Director and one Alternate Director.
2. Directors and the Alternates shall hold office for a term of three (3) years and may be reappointed. They shall continue in office until their successors are appointed. If the office of a Director becomes vacant for more than ninety (90) days before the end of his term, a successor shall be appointed or elected for the remainder of the term by the member who appointed the former Director.
Board of Directors: Powers
The Board of Directors shall be responsible for the operation of the Bank and for this purpose, shall in addition to the powers assigned to it expressly by this Agreement, exercise all the powers delegated to it by the Board of Governors, and in particular:
i- take decisions concerning the business of the Bank and its operations in conformity with the general directions of Board of Governors;
ii- submit the accounts for each financial year for the approval of the Board of Governors at each annual meeting; and
iii- approve the budget of the Bank;
iv- propose to the Board of Governors any amendment to this Agreement.
v- establish such branches, subsidiaries and representative offices as may be necessary or appropriate to conduct the business of the Bank.
Board of Directors: Procedures
The Board of Directors shall meet as often as the business of the Bank may require but not less than six times a year.
All matters before the Boards of Governors and Directors shall be decided by a majority not less than 85 percent of the voting power. Each share represents one vote.
1. The President of the Bank shall be appointed by the Board of Governors. The President, while holding the office, shall not be a Governor or a Director or their Alternate.
2. The term of office of the first President shall be five (5) years. Each subsequent President shall be appointed for a term of four (4) years. He shall, however, cease to hold office when the Board of Governors so decides.
3. The meetings of the Board of Directors shall be convened under the Chairmanship of the President but he shall have no vote. He may participate in meetings of the Board of Governors but shall not vote.
4. The President shall be the legal representative of the Bank.
5. The President shall be chief executive of the Bank and shall conduct, under the direction of the Board of Directors, the current business of the Bank. He shall be responsible for the organization, appointment and dismissal of the officers and staff in accordance with rules and regulations adopted by the Bank.
6. In appointing the officers and the staff, the President shall pay due regard to the recruitment of personnel equitably from among the ECO member countries, taking into consideration the importance and necessity for securing the highest standards of efficiency and technical competence.
1. At least three Vice-Presidents shall be appointed by the Board of Directors on the recommendation of the President. Each shall be a national of each respective founding member country, and shall hold office for a term of five (5) years exercise such authority and perform such functions in the administration of the Bank, as may, from time to time, be determined by the Board of Directors. In the absence of the President, one of the Vice-Presidents nominated by the President shall exercise the authority and perform the function of the President. A Vice-President, while holding office, shall not be a Governor or Director.
2. Vice-Presidents may participate in meetings of the Board of Directors but shall have no vote at such meetings.
International Character of the Bank and Prohibition of Political Activity
1. The Bank shall not accept loans or assistance that may in any way prejudice, limit, deflect or otherwise alter its purposes or functions.
2. The Bank, its President, Vice-Presidents, Directors, officers and staff shall not interfere in the political affairs of any member, nor shall they be influenced in their decisions by the political character of the member concerned. The Bank shall follow internationally accepted financial rules, procedures and standards and only commercial and economic considerations shall be relevant to the decisions.
3. The President, Vice-Presidents, officers and staff of the Bank, in the discharge of their offices, shall owe their duty entirely to the Bank and to no other authority. Each member of the Bank shall respect the international character of his duty and shall refrain from all attempts to influence any of them in the discharge of their duties.
Office of the Bank
1. The principal office of the Bank shall be located in the Republic of Turkey with two Branches to be opened within six months in Iran and Pakistan after the commencement of the Bank’s operations and with the possibility of opening branch offices in other member states on mutually agreed basis keeping in view their economic and commercial viability.
2. The Bank may enter into arrangements with other organizations with respect to the exchange of information or for other purposes consistent with this Agreement and by the approval of the Board of Governors.
3. The Board of Directors may decide upon opening of other branches of the Bank, provided that where a proposal for establishment of a branch has support of 51% majority of Directors but fails to gain the approval of 85% majority such proposal may be referred to the Board of Governors for decision by simple majority notwithstanding the provision of Article 19.
The Bank’s financial year shall start from January 1 and end on December 31.
Channel of Communication, Depositories
1. Each member shall designate an appropriate official authority with which the Bank may communicate in connection with any matter arising under this Agreement.
2. Each member shall designate its Central Bank or such other agency as may be agreed upon with the Bank, as a depository with which the Bank may keep its holding of currency of that member as well as other assets of the Bank.
Auditors – Reports
1. Upon the recommendations of the Board of Directors and approval of the Board of Governors, qualified external auditors of international repute registered in a member country shall be appointed for a term of one year, renewable on such terms and conditions as approved by the Board of Directors to audit the affairs of the Bank and to report to the Board of Directors on a periodic basis as may be decided by the Board of Directors.
2. The Bank shall transmit to its members and the ECO Secretariat an annual report containing non audited statement of its accounts and shall publish such reports. It shall also transmit quarterly to its members a summary showing the results of its operations.
3. The Bank may also publish such other reports as it deems desirable in carrying out its purposes and functions. Such reports shall be transmitted to the members of the Bank and the ECO Secretariat.
Allocation of Net Income
The Board of Governors shall determine annually what part of the net income of the Bank from ordinary capital operations shall be allocated to reserves, provided that no part of the net income of the Bank shall be distributed to members by way of profit until the General Reserves of the Bank shall have attained the level of twenty-five (25) percent of the subscribed capital.
Withdrawal and Termination of Operations of the Bank
1. Within six months after coming into force of this Agreement, the Board of Governors shall adopt the terms and conditions and the necessary regulations which shall govern the arrangements for withdrawal of a member. The said terms and conditions and the relevant regulations shall then become an integral part of this Agreement.
2. If a member fails to comply with its obligations and commitments under this Agreement then the Board of Governors shall decide on the appropriate actions to be taken by the Bank for dealing with such problem.
Temporary Suspension of Operations
In an emergency, the Board of Directors may temporarily suspend operations in respect of new commitments, generally or in specific areas, pending an opportunity for further consideration and action by the Board of Governors.
Termination of Operations
1. In the event that the governments of ECO member countries through a resolution of the Board of Governors decide to terminate the operations of the Bank, the Bank shall forthwith cease all activities, except those incidental to the orderly realization, conservation and preservation of its assets and settlement of its obligations.
2. Until final settlement of such obligations and distribution of assets, the Bank shall remain in existence and all mutual rights and obligations of the Bank and its members shall continue unimpaired.
Liability of Members and Payment of Claims
1. In the event of termination of the operations of the Bank, the liability of all members for the unpaid portion of the subscribed capital of the Bank shall continue until all claims of creditors, including all contingent claims, shall have been discharged.
2. Before making any payment to any claimant having a claim against the Bank, the Board of Governors shall make proper arrangements for realization and liquidation of assets of the Bank and shall make decisions about the priorities with which each claim is to be settled with due regard to the local laws and regulations.
Distribution of Assets
1. No distribution of assets shall be made to members on account of their subscriptions to the capital share of the Bank until all liabilities to creditors shall have been discharged or provided for. Such distribution must be approved by the Board of Governors.
2. Any distribution of the assets of the Bank to members shall be in proportion to the shares held by each member and shall be effected at such times and under such conditions as the Bank shall deem fair and equitable giving priority to depositors. The share of assets distributed need not be uniform as to type of asset. No member shall be entitled to receive its share in such a distribution of assets until it has settled all of its obligations to the Bank.
3. Any member receiving assets distributed pursuant to this Article shall enjoy the same rights with respect to such assets as the Bank enjoyed prior to the distribution.
Status, Immunities, Exemptions and Privileges
The Bank shall be an independent international institution possessing full juridical personality and, in particular, full capacity;
i) to contract
ii) to acquire and dispose of immovable and movable property and
iii) to institute legal proceedings.
Immunity of Archives
The archives of the Bank and, in general, all documents belonging to it, or held by it, shall be inviolable wherever located.
Secrecy of Transactions
The Bank shall observe complete secrecy in regard to the accounts of its clients and members shall respect the inviolability of such transactions.
Privileges for Communication
The official communications of the Bank shall be accorded by each ECO Member Country, treatment which is not less favourable than that accorded by it to any other international organization.
Immunities and Privileges of Bank personnel
All Governors, Directors, Alternates, the President, officers and employees of the Bank where they are not local citizens or nationals, shall be accorded the same immunities from immigration restrictions, alien registration requirements and national service obligations, as are accorded by members to the representatives, officials and employees of comparable rank of similar international organizations.
Each ECO Member Country, in accordance with its juridical system, shall promptly take such action as it is necessary to make effective in its own territory the provisions set forth in this Agreement and shall inform the Bank of the action which it has taken on the matter.
Amendments, Interpretation and Arbitration
1. This Agreement may be amended only by a resolution of the Board of Governors.
2. Any proposal to amend this Agreement, whether emanating from a member or the Board of Directors, shall be communicated to the Chairman of the Board of Governors. When an amendment has been adopted, the Bank shall so certify in an official communication addressed to all members. Amendments shall enter into force for all members three (3) months after the date of the official communication unless the Board of Governors specifies therein a different period.
Language. Interpretation, Application and Arbitration
1. The official language for communication of the Bank shall be English. The English text of this Agreement shall be regarded as authentic text for both interpretation and application.
2. Any question of interpretation or application of the provisions of this Agreement shall be submitted to the Board of Governors.
3. If any dispute arises between the Bank and a member country or amongst the members with regard to any matter relating to or arising out of the operation of the Bank, such dispute shall be submitted to the Board of Governors for decision.
Approval Deemed Given
Whenever the approval of any member is required before any act may be done by the Bank, except an act under Article 39 and 42 approval shall be deemed to have been given unless the member presents an objection within sixty (60) days, in notifying the member of proposed act.
Ratification or Acceptance
This Agreement shall be subject to ratification or acceptance by the signatories. Instruments of ratification or acceptance shall be deposited with the Secretariat of the ECO who shall duly notify the other Signatories of each deposit and the date thereof.
Signature and Deposit
1. The original of this Agreement in a single copy in English language shall be deposited at the Secretariat of the Economic Cooperation Organization.
2. This document shall be deposited at the Principal Office of the Bank upon its establishment. The Bank shall send certified copies of this Agreement to all the signatories, the Secretariat of the Economic Cooperation Organization and other countries which become members of the Bank.
Entry into Force
This Agreement shall come into force when instruments of ratification or acceptance shall have been deposited by the three ECO founding members. The ECO Secretariat shall inform the members of the date of entry into force of this Agreement (Establishment Date).
Commencement of Operations
1. As soon as this Agreement enters into force, each member shall appoint a Governor and an Alternate.
2. At its inaugural meeting, the Board of Governors shall: a) appoint the President of the Bank;
b) make arrangements for the appointment of the Directors of the Bank; and
c) make arrangements for the determination of the on which the Bank shall commence its
3. The Bank shall notify its members of the date of the commencement of its operations.
IN WITNESS whereof duly authorized representative have affixed their signatures on behalf of their Governments.
DONE AT Islamabad on this 15th day of March in the year one thousand nine-hundred and ninety-five in one single copy in English.
FOR THE ISLAMIC REPUBLIC OF IRAN--------------------------------------
FOR THE ISLAMIC REPUBLIC OF PAKISTAN-----------------------------
FOR THE REPUBLIC OF TURKEY--------------------------------------------