On September 7, 2011, by means of Law No. 26,701, Argentina approved the "Convenio Constitutivo del Banco del Sur".
The "Convenio Constitutivo del Banco del Sur" (the "Agreement") was signed by Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela on September 26, 2009 in Porlamar, Venezuela.
The Banco del Sur's purposes are to finance the economic, social and environmental development of the member states; strengthen the relations; reduce the asymmetries and promote the equal distribution of investments. It will only provide credit assistance to the member states for the execution of projects within the territorial scope of the UNASUR (Unión de Naciones Sudamericanas).
The city of Caracas (Venezuela) will be the headquarters of the Banco del Sur; and it will have agencies in the cities of Buenos Aires (Argentina) and La Paz (Bolivia), while also being authorized to open the necessary offices for the development of its purposes in the future. In order to comply with its purpose, Banco del Sur has full legal capacity to acquire rights and to enter into obligations (it is an international public financial institution), and is empowered to carry out any and all acts related to its purposes.
Banco del Sur's authorized capital stock amounts to twenty thousand million American Dollars (USD 20,000,000,000) represented by twenty thousand (20,000) ordinary shares of nominal value of one million American Dollars (USD 1,000,000) each. Banco del Sur's initial capital stock to be subscribed will be of seven thousand million American Dollars (USD 7,000,000) represented by seven thousand (7,000) ordinary shares, and will be subscribed as follows: (i) Argentina, Brazil and Venezuela will subscribe 20,000 shares each; (ii) Ecuador and Uruguay, 400 shares each, and (iii) Bolivia and Paraguay, 100 shares each.
This differentiated subscription is motivated in the different loan capacity to be requested by the member states. Hence, Argentina, Brazil and Venezuela will be able to request loans for up to four times their capital contribution. On the other hand, in the case of the other countries, they are authorized to request loans for up to ten times their capital contributions. Banco del Sur's loan limit will be of three times its net worth.
The Banco del Sur will have the following bodies: (i) Board of Ministers composed of the Ministers of Economy, Revenue, Finance or its equivalent of the member states; and (ii) Board of Administration, composed by one representative of each member state, appointed by the Board of Ministers by proposal of each member state. Also, it will have an Executive Board composed by representatives of the shareholders, and a Supervisory Board.
Any discrepancy, controversy, issue or claim raised between a member country and the Banco del Sur, or between member states, related to the interpretation or application of the Agreement, will be resolved by direct consults between the parties. After forty-five days as of the date of the beginning of the direct consults, any party may require that said issue be submitted to the decision of the Board of Ministers. After ninety days as of the presentation of the issue to the Board of Ministers without a resolution, the issue will be resolved definitely in an arbitration process.
Until today the Agreement has been ratified by Venezuela, Ecuador, Bolivia and Argentina, while the ratifications of Uruguay, Paraguay and Brazil are still pending. The Agreement shall take effect five days after the deposit of the ratification of the simple majority of the founding countries that, additionally, jointly, represent more that two thirds of the subscribed capital of the Banco del Sur. As of today the first requirement has been complied with but not the second one; in order to do so, the ratification of members accepting to subscribe shares that represent at least, USD 166,666,666 of Banco del Sur's capital stock (that is to say, 166.66 shares) is necessary.
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