ANNEX IV. STATUTE OF THE ENTERPRISE
1. The Enterprise is the organ of the Authority which shall carry out
activities in the Area directly, pursuant to article 153, paragraph 2 (a),
as well as the transporting, processing and marketing of minerals recovered
from the Area.
2. In carrying out its purposes and in the exercise of its functions, the
Enterprise shall act in accordance with this Convention and the rules,
regulations and procedures of the Authority.
3. In developing the resources of the Area pursuant to paragraph 1, the
Enterprise shall, subject to this Convention, operate in accordance with
sound commercial principles.
1. Pursuant to article 170, the Enterprise shall act in accordance with the
general policies of the Assembly and the directives of the Council.
Relationship to the Authority
2. Subject to paragraph 1, the Enterprise shall enjoy autonomy in the
conduct of its operations.
3. Nothing in this Convention shall make the Enterprise liable for the acts
or obligations of the Authority, or make the Authority liable for the acts
or obligations of the Enterprise.
Without prejudice to article 11, paragraph 3, of this Annex, no member of
the Authority shall be liable by reason only of its membership for the acts
or obligations of the Enterprise.
The Enterprise shall have a Governing Board, a Director-General and the
staff necessary for the exercise of its functions.
1. The Governing Board shall be composed of 15 members elected by the
Assembly in accordance with article 160, paragraph 2(c). In the election of
the members of the Board, due regard shall be paid to the principle of
equitable geographical distribution. In submitting nominations of
candidates for election to the Board, members of the Authority shall bear
in mind the need to nominate candidates of the highest standard of
competence, with qualifications in relevant fields, so as to ensure the
viability and success of the Enterprise.
Limitation of liability
2. Members of the Board shall be elected for four years and may be
reelected; and due regard shall be paid to the principle of rotation of
3. Members of the Board shall continue in office until their successors are
elected. If the office of a member of the Board becomes vacant, the
Assembly shall, in accordance with article 160, paragraph 2(c), elect a new
member for the remainder of his predecessor's term.
4. Members of the Board shall act in their personal capacity. In the
performance of their duties they shall not seek or receive instructions
from any government or from any other source. Each member of the Authority
shall respect the independent character of the members of the Board and
shall refrain from all attempts to influence any of them in the discharge
of their duties.
5. Each member of the Board shall receive remuneration to be paid out of
the funds of the Enterprise. The amount of remuneration shall be fixed by
the Assembly, upon the recommendation of the Council.
6. The Board shall normally function at the principal office of the
Enterprise and shall meet as often as the business of the Enterprise may
7. Two thirds of the members of the Board shall constitute a quorum.
8. Each member of the Board shall have one vote. All matters before the
Board shall be decided by a majority of its members. If a member has a
conflict of interest on a matter before the Board he shall refrain from
voting on that matter.
9. Any member of the Authority may ask the Board for information in respect
of its operations which particularly affect that member. The Board shall
endeavour to provide such information.
The Governing Board shall direct the operations of the Enterprise. Subject
to this Convention, the Governing Board shall exercise the powers necessary
to fulfil the purposes of the Enterprise, including powers:
Powers and functions of the Governing Board
- to elect a Chairman from among its members;
- to adopt its rules of procedure;
- to draw up and submit formal written plans of work to the Council in
accordance with article 153, paragraph 3, and article 162, paragraph
- to develop plans of work and programmes for carrying out the
activities specified in article 170;
- to prepare and submit to the Council applications for production
authorizations in accordance with article 151, paragraphs 2 to 7;
- to authorize negotiations concerning the acquisition of technology
including those provided for in Annex III, article 5, paragraph 3
(a), (c) and (d), and to approve the results of those negotiations;
- to establish terms and conditions, and to authorize negotiations,
concerning joint ventures and other forms of joint arrangements
referred to in Annex III, articles 9 and 11, and to approve the
results of such negotiations;
- to recommend to the Assembly what portion of the net income of the
Enterprise should be retained as its reserves in accordance with
article 160, paragraph 2 (f), and article 10 of this Annex;
- to approve the annual budget of the Enterprise;
- to authorize the procurement of goods and services in accordance with
article 12, paragraph 3, of this Annex;
- to submit an annual report to the Council in accordance with article
9 of this Annex;
- to submit to the Council for the approval of the Assembly draft rules
in respect of the organization, management, appointment and dismissal
of the staff of the Enterprise and to adopt regulations to give
effect to such rules;
- to borrow funds and to furnish such collateral or other security as
it may determine in accordance with article 11, paragraph 2, of this
- to enter into any legal proceedings, agreements and transactions and
to take any other actions in accordance with article 13 of this
- to delegate, subject to the approval of the Council, any
non-discretionary powers to the Director-General and to its
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.
Director-General and staff of the Enterprise
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
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.
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.
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
Reports and financial statements
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.
1. Subject to paragraph 3, the Enterprise shall make payments to the
Authority under Annex III, article 13, or their equivalent.
Allocation of net income
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.
Convention on the Law of the Sea: Index