Report of the Executive Directors to the Board of Governors Sixth Regular Election of Executive Directors

• 1. Section 3(d) of Article XII of the Articles of Agreement of the Fund provides that elections of elective Directors shall be conducted at intervals of two years. The Fifth Regular Election of Executive Directors was held at the Ninth Annual Meeting of the Board of Governors in September 1954.

• 2. Section 3(b) of Article XII provides that there shall not be less than twelve Executive Directors, of whom

  • (i) five shall be appointed by the five members having the largest quotas;

  • (ii) not more than two shall be appointed when the provisions of Article XII, Section 3(c) apply;

  • (iii) five shall be elected by the members not entitled to appoint Directors, other than the American Republics; and

  • (iv) two shall be elected by the American Republics not entitled to appoint Directors.

• 3. It is further provided in Section 3(b) that, “When governments of other countries become members, the Board of Governors may, by a four-fifths majority of the total voting power, increase the number of Directors to be elected.”

• 4. Under this provision the Board of Governors has on three occasions increased the number of Directors under Section 3(b) (iii) as the total voting power increased with the admission of new members. On the last occasion, at their Seventh Annual Meeting, the Board of Governors increased the number of Directors from fourteen to sixteen, the net increase in votes since the prior election having been 8,755. Since the Fourth Regular Election of Executive Directors, conducted at the Seventh Annual Meeting of the Board of Governors, six countries that were not included in Schedule A, namely, Afghanistan, the Argentine Republic, Indonesia, Israel, the Republic of Korea and the Republic of Viet-Nam, have become members of the Fund, with a combined voting power of 4,495. Furthermore, the quota of Ecuador has been increased, giving Ecuador an additional 50 votes. (Nicaragua has until October 22, 1956,¹ to consent to the increase in its quota, as approved by the Board of Governors.)

• 5. The Executive Directors recommend that nine Directors be elected under Article XII, Section 3(b) (iii), the same number as were elected at the Fifth Regular Election.

• 6. The Executive Directors also recommend that the minimum percentage of eligible votes required for election and the maximum percentage of eligible votes for any one nominee as specified in paragraphs 2, 3, 4 and 5 of Schedule C shall be 10 per cent and 14 per cent, respectively.

• 7. The attached proposed rules (Appendix I),² embodying the above recommendations, are substantially the same as the rules for the conduct of the Fifth Regular Election of Executive Directors, adopted by the Board of Governors in September 1954.

• 8. In view of the entrance of the Argentine Republic into membership in the Fund, it is recommended that the number of Executive Directors to be elected under Article XII, Section 3(b) (iv) be increased to three. If the Board of Governors determines so to increase the number of Executive Directors to be elected, additional rules for the conduct of the election of Executive Directors under Article XII, Section 3(b) (iv) will be required. The Executive Directors recommend that such rules specify a minimum of 28 per cent of eligible votes required for election and a maximum of 38 per cent of eligible votes for any one nominee. Proposed rules incorporating this recommendation are set forth in Appendix II. These rules differ from the rules of election set out in Appendix I only with respect to the provision for the conduct of election of Executive Directors by the American Republics not entitled to appoint Directors.

Appendix I Explanatory Note

The proposed Rules set out in Appendix I have not been reproduced in these Summary Proceedings since the Rules set out in Appendix II below were approved, as recommended by the Procedures Committee (Report No. 1, page 121), at Session No. 1, September 24, 1956, and were followed in the election held at Session No. 5, September 27, 1956. The Rules proposed in Appendix I may be found in Fund Document No. 6.

Appendix II Proposed Rules for the Conduct of the Sixth Regular Election of Executive Directors of the Fund¹

• 1. Definitions: In these Rules, unless the context shall otherwise require:

  • (a) Articles referred to are the Articles of Agreement of the Fund.

  • (b) The term “Board” means the Board of Governors of the Fund.

  • (c) The term “Chairman” means the Chairman of the Board of Governors or a Vice-Chairman acting as Chairman of the Board.

  • (d) The term “Governor” includes the Alternate Governor or any temporary Alternate Governor designated in accordance with Section 12 of the By-Laws when acting for the Governor.

  • (e) The term “Secretary” means the Secretary of the Fund.

  • (f) The term “election” means the Sixth Regular Election of Executive Directors.

  • (g) The term “session” means the meeting of the Board at which the election is held.

• 2. Date of Election: The election shall be held during the Eleventh Annual Meeting¹ of the Board at a session to be appointed by the Board.

• 3. Basic Rules: Subject to the adjustments hereinafter set forth, the provisions of Schedule C of the Articles of Agreement of the Fund shall apply to the conduct of the election.

• 4. Number of Executive Directors to be Elected Under Article XII, Section 3(b)(iii): At such election nine Executive Directors shall be elected under Article XII, Section 3(b) (iii).

• 5. In view of the number of Executive Directors to be elected under Article XII, Section 3(b) (iii):

  • (a) “Ten per cent” shall be substituted for “nineteen per cent” in paragraphs 2 and 5 of Schedule C.

  • (b) “Fourteen per cent” shall be substituted for “twenty per cent” in paragraphs 3, 4 and 5 of Schedule C.

• 6. Number of Executive Directors to be Elected Under Article XII, Section 3(b)(iv): At such election three Executive Directors shall be elected under Article XII, Section 3(b) (iv); and

  • (a) The minimum percentage of the eligible votes required for election under this subparagraph shall be twenty-eight per cent.

  • (b) The maximum percentage of eligible votes for any one nominee for the purposes of Rule 18 shall be thirty-eight per cent.

• 7. Nominations:

  • (a) A person shall be eligible for election as Executive Director when nominated by one or more Governors.

  • (b) Each nomination shall be made on a Nomination Form to be obtained from the Secretary and signed by the Governor or Governors making the nomination.

  • (c) A Governor shall nominate only one person.

  • (d) On the day preceding the session the Chairman shall, preferably in the Board, announce the nominations received, ask for any further nominations, and close the nominations.¹ The Secretary shall post a list of the persons nominated.²

• 8. Tally Sheets: The Secretary shall post at the session and distribute to each Governor and Alternate Governor prior to the election a Tally Sheet substantially in the form of Annex A attached hereto³ and a list of the persons nominated.²

• 9. Form of Ballot: The Secretary shall have available a sufficient number of ballot forms substantially in the form of Annex B attached hereto.³

• 10. Supervision of the Election: The Chairman shall supervise the election and shall appoint such tellers and other assistants as he deems necessary.

• 11. Distribution of Ballots: One ballot form shall be furnished to each Governor entitled to vote immediately before a ballot is taken. On any particular ballot only ballot forms distributed for that ballot shall be counted.

• 12. Balloting—Order: The first ballot shall be simultaneous balloting of all the Governors entitled to participate in the election of Executive Directors under Article XII, Section 3 (b) (iii) and all of the American Republics entitled to participate in the election of Executive Directors under Article XII, Section 3(b)(iv). The balloting for the Executive Directors elected under Article XII, Section 3(b) (iii) shall then be concluded before any further ballots are taken for the Executive Directors to be elected by the American Republics.

• 13. Balloting—General: Each ballot shall be taken as follows:

  • (a) The roll of members whose Governors are entitled to vote shall be called in alphabetical order.

  • (b) Immediately after a member’s name is called, the Governor for such member shall deposit his signed ballot in the ballot box.

  • (c) When the roll call shall have been completed and the ballots cast, the Chairman shall cause the ballots to be counted and shall cause to be announced (i) the names of the members whose Governors voted for each nominee and the total number of votes received by such nominee, (ii) the name of each person elected, and in case the votes of any members counted toward, but were not cast for, his election, the names of such members, and (iii) the names of the members whose Governors are entitled to vote on the next ballot, if any.

  • (d) In the event that the tellers shall be of the opinion that any particular ballot is not properly executed, they shall, if possible, afford the Governor casting such ballot an opportunity to correct it before tallying the results; and such ballot, if so corrected, shall be deemed to be a valid ballot.

• 14. Recess: After any ballot, the Chairman may adjourn the session for such period as he may deem necessary, if in his opinion such action will facilitate the election.

• 15. Election of Executive Directors Under Article XII, Section 3(b)(iii):

  • (a) The provisions of Schedule C as adjusted by these Rules shall govern the election of Directors under this sub-paragraph.

  • (b) When on any ballot the number of nominees shall not exceed the number of Executive Directors to be elected, each nominee shall be deemed to be elected by the number of votes received by him on such ballot; provided, however, that if on such ballot the votes of any Governor shall be deemed under paragraph 4 of Schedule C to have raised the votes cast for any nominee above fourteen per cent of the eligible votes, no nominee shall be deemed to have been elected who shall not have received on such ballot ten per cent of the eligible votes and a succeeding ballot shall be taken on which any nominee not elected shall be eligible.

• 16. Election of Executive Directors Under Article XII, Section 3(b)(iv):

  • (a) These Rules shall in place of paragraph 7 of Schedule C govern the election of the Directors to be elected by the American Republics under Article XII, Section 3 (b) (iv).

  • (b) Each of the Governors entitled to vote shall cast for one person all the votes held by him under Article XII, Section 5(a).

  • (c) If there are more than three nominees, the three nominees receiving the greatest number of votes shall be elected, provided that no nominee shall be elected who receives less than twenty-eight per cent of the eligible votes.

  • (d) When on any ballot the number of nominees shall not exceed the number of Executive Directors to be elected, each nominee shall be elected by the number of votes received by him; provided, that if the votes of any Governor shall be deemed to have raised the votes cast for any nominee above thirty-eight per cent of the eligible votes, no nominee shall be elected on that ballot who shall not have received twenty-eight per cent of the eligible votes and a succeeding ballot shall be taken on which any nominee not elected on the preceding ballot shall be eligible.

• 17. Balloting—Succeeding Ballots for Election of Executive Directors Under Article XII, Section 3(b)(iii):

  • (a) If, as a result of the first ballot, the number of Executive Directors to be elected in accordance with paragraph 4 above shall not have been elected, a second and, if necessary, further ballots shall be taken. The Governors entitled to vote on such succeeding ballots shall be only (i) those Governors who voted on the preceding ballot for any nominee not elected, and (ii) those Governors whose votes for a nominee elected on the preceding ballot are deemed under paragraph 4 of Schedule C to have raised the votes cast for such nominee above fourteen per cent of the eligible votes.

  • (b) The votes of a Governor shall not be deemed under paragraph 4 of Schedule C to have raised the total votes for a nominee above fourteen per cent of the eligible votes if without the votes of such Governor such total would be more than ten per cent but not more than fourteen per cent of the eligible votes.

  • (c) If on any ballot two or more Governors having an equal number of votes shall have voted for the same nominee and the votes of one or more, but not all, of such Governors could be deemed under paragraph 4 of Schedule C to have raised the total votes received by such nominee above fourteen per cent of the eligible votes, the Chairman shall determine by lot the Governor or Governors, as the case may be, who shall be entitled to vote on the next ballot.

  • (d) If a Governor shall abstain from voting on any of the ballots held for the election of Executive Directors under Article XII, Section 3(b)(iii), he shall not be entitled to vote on any subsequent ballot, and his votes shall not be counted, within the meaning of Article XII, Section 3(i), towards the election of any Executive Director; provided, however, that if such abstention shall have first occurred on the last of several ballots, the votes of such Governor shall be deemed to have been cast for the election of the Executive Director elected on such ballot by the least number of votes. If at the time any ballot is taken a member shall not be represented by a Governor at the Annual Meeting or session at which the ballot is taken, the member and its Governor, if any, shall be deemed for the purpose of this paragraph to have abstained from voting on that ballot.

• 18. Balloting—Succeeding Ballots for Election of Executive Directors Under Article XII, Section 3(b)(iv):

  • (a) If, as a result of the first ballot, the number of Executive Directors to be elected in accordance with paragraph 6 above shall not have been elected, a second and, if necessary, further ballots shall be taken. The Governors entitled to vote on such succeeding ballots shall be only (i) those Governors who voted on the preceding ballot for any nominee not elected, and (ii) those Governors whose votes for a nominee elected on the preceding ballot are deemed to have raised the votes cast for such nominee above thirty-eight per cent of the eligible votes.

    In determining whether the votes cast by a Governor are to be deemed to have raised the total of any nominee above thirty-eight per cent of the eligible votes, the thirty-eight per cent shall be deemed to include, first, the votes of the Governor casting the largest number of votes for such nominee, then, the votes of the Governor casting the next largest number of votes and so on until thirty-eight per cent is reached.

  • (b) The votes of a Governor under subparagraph (a) above shall not be deemed to have raised the total votes for a nominee above thirty-eight per cent of the eligible votes if without the votes of such Governor such total would be more than twenty-eight per cent but not more than thirty-eight per cent of the eligible votes.

  • (c) If on any ballot two or more Governors having an equal number of votes shall have voted for the same nominee and the votes of one or more, but not all of such Governors, could be deemed under subparagraph (a) above to have raised the total votes received by such nominee above thirty-eight per cent of the eligible votes, the Chairman shall determine by lot the Governor or Governors, as the case may be, who shall be entitled to vote on the next ballot.

  • (d) If a Governor shall abstain from voting on any of the ballots held for the election of three Executive Directors to be elected under Article XII, Section 3(b) (iv), he shall remain entitled to vote on subsequent ballots.

• 19. Elimination of Nominees: If on any ballot two or more nominees shall receive the lowest number of votes, no nominee shall be dropped from the next succeeding ballot, but if the same situation shall continue on such succeeding ballot, the Chairman shall eliminate by lot one of such nominees from the next succeeding ballot.

• 20. Announcement of Results of Election: After the last ballot of the election, the Chairman shall cause to be distributed to each Governor a statement setting forth the results of the election.¹

• 21. Effective Date of Election of Executive Directors: The effective date of the election shall be November 1, 1956. Incumbent elected Executive Directors shall serve through the day preceding such date.

• 22. General: Any question arising in connection with the conduct of the election shall be resolved by the tellers, subject to appeal, at the request of any Governor, to the Chairman and from him to the Board. Whenever possible, any such question shall be put in general terms without identifying the members or Governors concerned.

Appendix III: Statement of Results of Election, September 27, 1956¹

Annex I: Amendments to the Rules and Regulations Since the Tenth Annual Meeting

Rule I–2. Text as amended on May 23, 1956 (The part affected by the amendment is shown in brackets.):

• The service charge payable by a member buying the currency of another member in exchange for its own currency shall be paid at the time the transaction is consummated. The service charge payable for such transactions taking place from December 1, 1951 through [December 31, 1955 (amended December 27, 1955 to read June 30, 1956)] December 31, 1956, shall be ½ of 1 per cent.

• [Former text adopted September 25, 1946, amended November 19,1951, November 14,1952, June 26,1953, October 14, 1953, December 23,1953, December 15,1954, December 27, 1955 and May 23,1956]

Rule I–4(f). Text as amended on May 23, 1956 (The part affected by the amendment is shown in brackets.):

• With respect to each segment of the holdings of a member’s currency to the extent that it represents the acquisition of that currency by the Fund from January 1, 1954 through [December 31, 1955 (amended December 27, 1955 to read June 30, 1956)] December 31, 1956:

  • (i) The charge to be levied on each segment to the extent that it is within the first bracket of 50 per cent in excess of the quota shall be nil for the first three months, 2 per cent per annum for the next fifteen months, and an additional ½ per cent per annum for each subsequent six months.

  • (ii) The charge to be levied on each segment to the extent that it is within the second bracket of more than 50 per cent and not more than 75 per cent in excess of the quota shall be nil for the first three months, 2 per cent per annum for the next nine months, and an additional ½ per cent per annum for each subsequent six months.

  • (iii) The charge to be levied on each segment to the extent that it is within the third bracket of more than 75 per cent and not more than 100 per cent in excess of the quota shall be nil for the first three months, 2 per cent per annum for the next three months, and an additional ½ per cent per annum for each subsequent six months.

[Former text adopted December 23, 1953, amended December 15,1954, December 27,1955 and May 23, 1956]