EXPLORING AIIB’S INNER MECHANISMS

What is the composition of the Board of Governors？

Each member of the AIIB will appoint a governor to represent it on the Board of Governors， which is vested with all of the AIIBs powers. The board meets annually， and can delegate any of its powers to the Board of Directors except for certain reserved powers.

What is the composition of the Board of Directors？

The AIIB will have 12 directors on its Board of Directors： nine elected by regional members and three elected by non-regional members. Each director will have an alternate director， and directors elected by more than a specified number of members may appoint an additional alternate director. The Board of Directors will be responsible for the direction of the AIIBs general operations and， for this purpose， will exercise all the powers delegated to them by the Board of Governors.

How is voting power in the AIIB calculated？

Members voting power is the sum of their Basic Votes， Share Votes and， where applicable， Founding Member Votes. Basic Votes for all members constitute 12 percent of the total number of votes （Basic Votes， Share Votes and Founding Member Votes） at any time； an equal number of Basic Votes is allocated to each member. For Share Votes， each member has one vote for each share of capital stock held. Each Founding Member will also be allocated 600 Founding Member votes.

How will the Board of Directors exercise oversight？

The Board of Directors will supervise the banks management and operation on a regular basis and will establish an oversight mechanism for that purpose in line with the principles of transparency， openness， independence and accountability. The mechanism is expected to address such areas as audits， evaluations， fraud and corruption， project complaints and staff grievances.

What is the AIIBs capital base？

The authorized capital stock of the AIIB is $100 billion， divided into 1 million shares having a par value of $100，000 each. The original authorized capital stock is divided into 20 percent paidin shares and 80 percent callable shares. The authorized capital stock of the bank may be increased by the Board of Governors.

How are shares of capital stock allocated？

As a regional bank， the AIIBs regional members jointly hold the majority of capital stock—a minimum of 75 percent except as otherwise agreed by the Board of Governors. This shareholding arrangement reflects the commitment and ownership of regional members. Schedule A of the Articles of Agreements of the AIIB shows unallocated shares totaling about $1.615 billion for regional members and $234 million for non-regional members in anticipation of additional members joining each category. These numbers may change depending on actual subscriptions by Prospective Founding Members. Unallocated shares would be available for subscription by new or existing members as determined by the Board of Governors.

The basic parameter for the allocation of capital stock to members is the relative share of the global economy of members （based on GDP） within the regional and non-regional groupings， with the understanding that the GDP share is indicative only for non-regional members.

What are AIIBs key financial instruments？

The AIIB will focus principally on financing specific projects or specific investment programs， equity investments； and guaran- tees. It may make， co-finance or participate in direct loans； invest in the equity capital of an institution or enterprise； guarantee loans for economic development； deploy Special Funds resources in accordance with the agreements determining their use； or provide other types of financing as may be determined by the Board of Governors. Special Funds would be donor funds that are given to the AIIB for use consistent with the banks purpose and functions.

How will the AIIB raise its capital？

In addition to the capital subscribed by its members， the AIIB will raise funds primarily through the issuance of bonds in financial markets as well as through the interbank market transactions and other financial instruments. The AIIB may raise funds， through borrowing or other means， in member countries or elsewhere， in accordance with relevant legal provisions. The AIIB will seek to obtain the highest credit rating possible to facilitate borrowing in capital markets.

How will the AIIB address environmental and social impacts and risks？

The Board of Directors will establish AIIBs policies. The bank will ensure that each of its operations complies with its operational and financial policies. These policies would be based on international best practices and would include， among others， environmental and social frameworks， disclosure， procurement， debt sustainability， and operations in disputed areas. The draft environmental and social policy framework is being developed through an ongoing consultative process with AIIBs Prospective Founding Members and other stakeholders.