Section 168p. 168

PUBLIC INTERNATIONAL LAW COMPENDIUM VOLUME I

1. The Assembly shall, upon the recommendation of the

Council and the nomination of the Governing Board, elect

the Director-General of the Enterprise who shall not be a

member of the Board. The Director-General shall hold

office for a fixed term, not exceeding five years, and may

be re-elected for further terms.

2. The Director-General shall be the legal representative

and chief executive of the Enterprise and shall be directly

responsible

to

the

Board

for

the

conduct

of

the

operations of the Enterprise. He shall be responsible for

the

organization,

management,

appointment

and

dismissal of the staff of the Enterprise in accordance with

the

rules

and

regulations

referred

to

in

article

6,

subparagraph (l), of this Annex. He shall participate,

without the right to vote, in the meetings of the Board

and may participate, without the right to vote, in the

meetings of the Assembly and the Council when these

organs

are

dealing

with

matters

concerning

the

Enterprise.

3. The paramount consideration in the recruitment and

employment of the staff and in the determination of their

conditions of service shall be the necessity of securing the

highest

standards

of

efficiency

and

of

technical

competence. Subject to this consideration, due regard

shall be paid to the importance of recruiting the staff on

an equitable geographical basis.

4. In the performance of their duties the Director-General

and the staff shall not seek or receive instructions from

any government or from any other source external to the

Enterprise. They shall refrain from any action which

might reflect on their position as international officials of

the Enterprise responsible only to the Enterprise. Each

State

Party

undertakes

to

respect

the

exclusively

international

character

of

the

responsibilities

of the

Director-General

and

the

staff

and

not

to

seek

to

influence them in the discharge of their responsibilities.

5. The responsibilities set forth in article 168, paragraph 2,

are equally applicable to the staff of the Enterprise.

Article 8. Location

The Enterprise shall have its principal office at the seat of

the Authority. The Enterprise may establish other offices

and facilities in the territory of any State Party with the

consent of that State Party.

Article 9. Reports and financial statements

1. The Enterprise shall, not later than three months after

the end of each financial year, submit to the Council for

its consideration an annual report containing an audited

statement of its accounts and shall transmit to the

Council at appropriate intervals a summary statement of

its financial position and a profit and loss statement

showing the results of its operations.

2. The Enterprise shall publish its annual report and such

other reports as it finds appropriate.

3. All reports and financial statements referred to in this

article

shall

be

distributed

to

the members of the

Authority.

Article 10. Allocation of net income

1. Subject to paragraph 3, the Enterprise shall make

payments to the Authority under Annex III, article 13, or

their equivalent.

2. The Assembly shall, upon the recommendation of the

Governing Board, determine what portion of the net

income of the Enterprise shall be retained as reserves of

the Enterprise. The remainder shall be transferred to the

Authority.

3. During an initial period required for the Enterprise to

become self-supporting, which shall not exceed 10 years

from the commencement of commercial production by

it, the Assembly shall exempt the Enterprise from the

payments referred to in paragraph 1, and shall leave all of

the net income of the Enterprise in its reserves.

Article 11. Finances

1. The funds of the Enterprise shall include:

(a) amounts received from the Authority in accordance

with article 173, paragraph 2(b);

(b) voluntary contributions made by States Parties for the

purpose of financing activities of the Enterprise;

(c) amounts borrowed by the Enterprise in accordance

with paragraphs 2 and 3;

(d) income of the Enterprise from its operations;

(e) other funds made available to the Enterprise to enable

it to commence operations as soon as possible and to

carry out its functions.

2. (a) The Enterprise shall have the power to borrow funds

and to furnish such collateral or other security as it may

determine. Before making a public sale of its obligations

in the financial markets or currency of a State Party, the

Enterprise shall obtain the approval of that State Party.

The total amount of borrowings shall be approved by the

Council upon the recommendation of the Governing

Board.

(b) States Parties shall make every reasonable effort to

support applications by the Enterprise for loans on capital

markets and from international financial institutions.

3. (a) The Enterprise shall be provided with the funds

necessary to explore and exploit one mine site, and to

transport, process and market the minerals recovered

therefrom and the nickel, copper, cobalt and manganese

obtained, and to meet its initial administrative expenses.

The amount of the said funds, and the criteria and factors

for its adjustment, shall be included by the Preparatory

Commission

in

the

draft

rules,

regulations

and

procedures of the Authority.

(b) All States Parties shall make available to the Enterprise

an amount equivalent to one half of the funds referred to

in subparagraph (a) by way of long-term interest-free

loans in accordance with the scale of assessments for the

United Nations regular budget in force at the time when

the assessments are made, adjusted to take into account

the States which are not members of the United Nations.

Debts incurred by the Enterprise in raising the other half

of the funds shall be guaranteed by all States Parties in

accordance with the same scale.

(c) If the sum of the financial contributions of States

Parties is less than the funds to be provided to the

Enterprise under subparagraph (a), the Assembly shall, at

its first session, consider the extent of the shortfall and

adopt

by consensus measures for dealing with this

shortfall, taking into account the obligation of States

Parties

under

subparagraphs

(a)

and

(b)

and

any

recommendations of the Preparatory Commission.

(d) (i) Each State Party shall, within 60 days after the entry

into force of this Convention, or within 30 days after the

deposit of its instrument of ratification or accession,

whichever is later, deposit with the Enterprise irrevocable,

non-negotiable, non-interest-bearing promissory notes in

the

amount

of

the

share

of

such

State

Party

of

interest-free loans pursuant to subparagraph (b).

(ii) The Board shall prepare, at the earliest practicable

date

after

this

Convention

enters

into

force,

and

thereafter at annual or other appropriate intervals, a

schedule

of

the

magnitude

and

timing

of

its

requirements

for

the

funding

of

its

administrative

expenses and for activities carried out by the Enterprise in

accordance with article 170 and article 12 of this Annex.

(iii) The States Parties shall, thereupon, be notified by the

Enterprise, through the Authority, of their respective

shares of the funds in accordance with subparagraph (b),

required for such expenses. The Enterprise shall encash

such

amounts

of

the

promissory

notes as may be

required to meet the expenditure referred to in the

schedule with respect to interest-free loans.

© Compiled by RGL

168 of 192