International Finance Corporation
No. 36 of 1966
An Act to amend the International Finance Corporation Act 1955–1963 in consequence of an amendment of the Articles of Agreement of the International Finance Corporation.
[Assented to 12 September, 1966]
BE it enacted by the Queen’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—
Short title and citation.
1.—(1.) This Act may be cited as the International Finance Corporation Act 1966.
(2.) The International Finance Corporation Act 1955–1963 is in this Act referred to as the Principal Act.
(3.) The Principal Act, as amended by this Act, may be cited as the International Finance Corporation Act 1955–1966.
Commencement.
2. This Act shall come into operation on the day on which it receives the Royal Assent.
3. Sections 3 and 4 of the Principal Act are repealed and the following sections inserted in their stead:—
Definition.
“3. In this Act, ‘the Agreement’ means the Articles of Agreement of the International Finance Corporation set out in the First Schedule to this Act, as amended in accordance with the resolutions set out in the Second and Third Schedules to this Act, being resolutions that have been accepted in accordance with Article VII of those Articles.
Membership of Australia of International Finance Corporation.
“4. The membership of Australia of the International Finance Corporation established under the Agreement is approved.”.
4. The Principal Act is amended by adding at the end thereof the following Schedule:—
THIRD SCHEDULE Section 3.
Resolution No. 56
Borrowing from International Bank for Reconstruction and Development
WHEREAS the Board of Directors has communicated to the Chairman of the Board of Governors a proposal to amend the Articles of Agreement; and
WHEREAS the Chairman has brought the proposal before the Board of Governors:
NOW THEREFORE the Board of Governors resolves that, in accordance with the proposal of the Board of Directors, the Articles of Agreement are hereby amended as follows:
1. By deleting from Article IV, Section 6 the second sentence reading as follows: “The Corporation shall not lend to or borrow from the Bank.”
2. By adding to Article III, Section 6 (i) a sentence reading as follows: “if and so long as the Corporation shall be indebted on loans from or guaranteed by the Bank, the total amount outstanding of borrowings incurred or guarantees given by the Corporation shall not be increased if, at the time or as a result thereof, the aggregate amount of debt (including the guarantee of any debt) incurred by the Corporation from any source and then outstanding shall exceed an amount equal to four times its unimpaired subscribed capital and surplus;”
Overview
The International Finance Corporation Act 1966 was enacted to amend the International Finance Corporation Act 1955–1963 in light of changes to the Articles of Agreement of the International Finance Corporation. This legislation was assented to on 12 September 1966 by the Queen, the Senate, and the House of Representatives of the Commonwealth of Australia. The act repeals sections of the Principal Act and replaces them with new provisions to reflect the updated Articles of Agreement. Specifically, it approves Australia’s membership in the International Finance Corporation under the amended Agreement, which now allows the Corporation to borrow from the International Bank for Reconstruction and Development, subject to certain conditions. The policy objective of this act is to ensure that Australia's legislative framework aligns with the updated governance and operational guidelines of the International Finance Corporation.
Scope and Application
The International Finance Corporation Act 1966 applies to the Commonwealth of Australia and its membership in the International Finance Corporation (IFC). The Act is a legislative amendment to the International Finance Corporation Act 1955–1963, updating the Articles of Agreement of the IFC. It pertains specifically to the conditions under which Australia, as a member of the IFC, consents to the changes in the IFC's Articles of Agreement, including the ability to borrow from the International Bank for Reconstruction and Development (IBRD) under certain conditions. The Act outlines the specific changes to the Articles of Agreement, such as the removal of the restriction on the Corporation lending to or borrowing from the IBRD and the addition of a new condition regarding the Corporation’s borrowing limit. The Act does not explicitly detail exclusions, exemptions, or thresholds, but its application is confined to the legislative context of Australia's membership and participation in the IFC. The scope of the Act is defined by the changes in the Articles of Agreement and does not extend beyond the specified amendments unless further subordinate instruments are enacted.
Key Provisions
The International Finance Corporation Act 1966 (C1966A00036) serves to amend the International Finance Corporation Act 1955–1963 in response to changes in the Articles of Agreement of the International Finance Corporation. The Act commences on the day of its Royal Assent, which was 12 September 1966. It replaces sections 3 and 4 of the Principal Act with new provisions that approve Australia's membership in the International Finance Corporation under the amended Agreement. This approval is formalised in section 4 of the Act, which explicitly states that Australia's membership is approved under the Agreement as set out in the First Schedule to the Act, as amended by the resolutions in the Second and Third Schedules. These resolutions have been accepted in accordance with Article VII of the Articles of Agreement.
The Act imposes several obligations on the parties involved. Section 3 defines key terms, such as "the Agreement," which refers to the Articles of Agreement of the International Finance Corporation. The inclusion of the Third Schedule, Resolution No. 56, alters the borrowing provisions by removing the restriction on the Corporation borrowing from the International Bank for Reconstruction and Development, while introducing a new condition that borrowings must not exceed four times the Corporation's unimpaired subscribed capital and surplus if it is indebted to the Bank. This amendment places a responsibility on the Corporation to ensure compliance with the new financial limits when borrowing from any source.
Failure to comply with the provisions of the amended Act could have significant legal consequences. While the Act does not explicitly state offences or penalties for non-compliance, breaches of the Articles of Agreement or the resolutions could potentially lead to civil or administrative actions. The International Finance Corporation, as a party to the Agreement, would be expected to adhere to the financial limits and conditions set forth in Resolution No. 56. Any failure to do so could result in actions by the Bank or other member countries, potentially impacting the Corporation's operations and financial standing.