Mr. Speaker, at its first annual meeting in June 2016, the AIIB announced a formal process for admitting new members. Potential members have until September 30, 2016, to signal their interest in joining the bank. On August 31, 2016, the Minister of Finance announced Canada’s intention to apply for membership at the Asian Infrastructure Investment Bank, AIIB.
With regard to (a), (b), and (c), when the AIIB’s governors approve new members, they will allocate available shareholdings and confirm other modalities of membership, such as investment amount and the time period over which payments will occur.
As per the AIIB articles of agreement, the total authorized capital stock of the AIIB shall be $100 billion U.S., divided into one million shares having a par value of $100,000 each. The original authorized capital stock shall be divided into paid-in shares, $20 billion, and callable shares, $80 billion. Each subscription to the original authorized capital stock shall be for paid-in shares and callable shares in the proportion of one to four.
Existing members have until December 31, 2016, to complete their domestic ratification processes and indicate if they are subscribing to their full shareholding allotment. Once all founding members have ratified the agreement, the full number of unclaimed shares available for new members will be known. As such, it is expected that the bank’s governors will approve new members and allocate available shareholdings in early 2017. Canada’s investment amount, percentage of equity, and other terms of payment will be determined based on parameters communicated to it at that time.
With regard to (d), Canada’s investment in the AIIB has not yet been determined. No investment prospectus has been provided. As is standard with investments in multilateral development banks, the terms of the investment are defined in the articles of agreement.
With regard to (e), the AIIB’s articles of agreement include a dividend policy. Article 18 states the following:
18.1 The Board of Governors shall determine at least annually what part of the net income of the Bank shall be allocated, after making provision for reserves, to retained earnings or other purposes and what part, if any, shall be distributed to the members. Any such decision on the allocation of the Bank’s net income to other purposes shall be taken by a Super Majority vote as provided in Article 28.
18.2 The distribution referred to in the preceding paragraph shall be made in proportion to the number of shares held by each member, and payments shall be made in such manner and in such currency as the Board of Governors shall determine.
While this allows for the AIIB to provide dividends to shareholders, in practice the payment of dividends by multilateral development banks to shareholders has not been the norm. Rather, significant net income is often kept on the organization’s balance sheet as retained earnings, increasing the equity base of the organization. The AIIB’s practice in this regard is subject to a future decision by shareholders.
With regard to (f), the AIIB’s articles of agreement include exit provisions. Should a future government decide to divest from the organization, article 39.2 dictates the terms of exit:
39.2 At the time a country ceases to be a member, the Bank shall arrange for the repurchase of such country’s shares by the Bank as a part of the settlement of accounts with such country in accordance with the provisions of paragraphs 3 and 4 of this Article. For this purpose, the repurchase price of the shares shall be the value shown by the books of the Bank on the date the country ceases to be a member.