Natalie Lichtenstein,former General Counsel of the Asian Infrastructure Investment Bank (AIIB), discusses key features of AIIB in light of other multilateral development banks, based on her new book A Comparative Guide to the Asian Infrastructure Investment Bank (Oxford 2018).



Setting up the Asian Infrastructure Investment Bank (AIIB) was a once-in-a-lifetime experience, working with negotiators from around the world to create a new international organization in a little over one year. New international organizations are rarely created, and AIIB is surely one of the few so far where the People’s Republic of China has played a leading role.  For me, this meant taking three decades of legal experience at the World Bank, the oldest multilateral development bank (MDB), as the foundation for the legal architecture of the newest MDB.  Yet, the legal structures and policies of the other MDBs were also scrutinized and brought into the AIIB’s legal framework—such as the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (AsDB).

Having seen the intense interest in AIIB and myriad questions about its origins, I was inspired to write a comparative book that explains AIIB in the context of the other MDBs.  The book, A Comparative Guide to the Asian Infrastructure Investment Bank, lays out the key aspects of an MDB for the reader, whether new to this set of international financial institutions or an old hand.  Mandates, membership, investment operations, finance and governance are explained for AIIB, and compared to its predecessors.   Reflecting my front-row seat at AIIB’s creation, the book also discusses AIIB’s establishment process and some of the novel situations we faced.


AIIB opened for business in 2016, as a US$100 billion MDB that finances public and private infrastructure projects for Asia.  AIIB’s founders, led by China, first spanned Asia, Europe and the Middle East.  From the 57 countries that signed AIIB’s Articles of Agreement in June 2015, its membership has grown to 87 approved members around the world, including Canada, Latin America and Africa.  Its membership is global.

AIIB’s mandate is to provide finance for infrastructure and other productive sectors to benefit Asia.  Under its Articles of Agreement, AIIB is also authorized to finance some investment operations located outside Asia that are consistent with that mandate.  This contrasts with other regional MDBs whose development finance is restricted to regional member countries. 

AIIB’s instruments are a familiar panoply of loans, guarantees, equity and technical assistance, and both sovereign and non-sovereign, private sector investments are included.   

AIIB’s operational policies must be met in every investment operation, as required by its Articles of Agreement.  These policies include an Environmental and Social Framework as well as policies on competitive procurement of goods and services financed by AIIB, anti-corruption in investment operations and administrative functions, and financial policies (including debt sustainability).  Transparency is explicitly mandated under the Articles of Agreement, and AIIB has recently replaced its Public Information Interim Policy with a new comprehensive Policy on Public Information governing the availability and release of documents related to AIIB-financed investment operations and AIIB’s own administration.

Since 2016, AIIB has approved over thirty investment operations, with financing up to US$6.3 billion.  Among these first operations are both sovereign and private sector operations, and about 70% by number have been cofinanced with other, long-established MDBs.  Cofinancing arrangements confirm the compatibility of AIIB’s operational policy requirements with those of other MDBs.  AIIB has also approved several strategies, on mobilizing capital, non-regional investments, and for energy and transport sector operations.  AIIB’s Board of Directors has also recently approved a delegation of decision-making authority for investment operations to AIIB’s President, within specified parameters and resting on an accountability framework. [1]


AIIB’s governance follows a traditional MDB model, with three tiers.[2] 

The Board of Governors is the highest authority, composed of one representative of each member (currently, that would mean an 87-member Board).  Typically, MDB Boards of Governors hold Annual Meetings, taking votes on resolutions between meetings, and delegate most of their authority to a board of directors.  Certain powers cannot be delegated, so that the Board of Governors approves such key decisions as capital increases, admission of new members and amendments to the Articles of Agreement.  AIIB’s Board of Governors is further endowed with several unique and explicit powers, such as adding new types of financing, permitting support for non-member countries, increasing the lending limit, establishing subsidiaries, and modifying the definition of regional or the percentage of regional shareholding (normally set at 75%).

AIIB’s Board of Directors has 12 members, nine representing regional members and three representing non-regional members.  AIIB’s Directors serve on a part-time non-resident basis, with detailed powers for policy, oversight and delegation.  Many of AIIB’s predecessors have maintained resident boards; AIIB followed the practice of several others (and most companies) in having a non-resident board.

The Board of Directors is responsible for the direction of the general operations of AIIB and also exercises the powers delegated by the Board of Governors.  AIIB’s Articles of Agreement enumerate several specific powers of the Board of Directors.  Among the Board’s noteworthy powers are several that set AIIB apart.

·        The AIIB Board of Directors has the authority to establish the policies of the Bank; this is the practice elsewhere but it is not always explicit. Major operational and financial policies require Board approval by a majority representing not less than three-fourths of total voting power.   The Board may, under Bank policies, delegate authority to the President, and decisions on such delegation also require approval of the Board of Directors by the same majority.

·        The AIIB Board of Directors has the authority to take decisions on the financing operations of AIIB, and to delegate that authority to the President.   Delegation decisions require the same 75% majority as for delegation under policies. Many MDB Boards exercise this approval authority, but only later charters make this explicit; none provide for delegation.

·        In a provision unique to the AIIB Articles of Agreement, the Board of Directors is expressly required to supervise the management and operation of AIIB on a regular basis.   The AIIB Articles of Agreement further require the Board of Directors to establish an oversight mechanism for this purpose, in line with principles of transparency, openness, independence and accountability.  The AIIB Chief Negotiators’ Report recorded that the negotiators expected the oversight mechanism to address such areas as audit, evaluation, fraud and corruption, project complaints and staff grievances.

AIIB’s President is elected by the Board of Governors, must be a national of a regional member country, and is limited to two terms.   Echoing a phrase used in other MDB discussions but not yet in other charters, the Articles of Agreement require that the President be chosen through an open, transparent and merit-based selection process.  The President serves as non-voting Chairman of the Board of Directors, and, as the Bank’s chief executive, the President is chief of the staff of the Bank and conducts, under the direction of the Board of Directors, the current business of AIIB.   Additional specific powers of the President include the responsibility for the organization, appointment and dismissal of officers and staff, in accordance with regulations adopted by the Board of Directors, and the preparation of the administrative budget to be presented to the Board of Directors for approval.

AIIB’s voting structure is tied to shareholding but somewhat less so than in many other MDBs.  The voting power of each member is comprised of share votes, basic votes and, if applicable, Founding Member votes.  Share votes are allocated on the basis of one share for each share of AIIB stock, so larger shareholders have more share votes.  All shareholders have the same number of basic votes.  In addition, each signatory of the AIIB Articles of Agreement that becomes a Founding Member gets an additional allocation of Founding Member Votes. 

Overall, shareholding determines somewhat less than 90% of total voting power, mitigating to an extent the influence of large shareholders.  Comparably, shareholding determines 94% of World Bank voting power and 80% of ADB voting power; in others, the range is 99-100% determined by shareholding.  In AIIB, certain important decisions require a 75% majority of voting power; since China’s current voting power is over 25%, these decisions require China’s support.

HERITAGE AND INNOVATION? In terms of mandate and operations, AIIB’s prerequisites are in line with MDB models, while leaving ample room for AIIB to chart its own course.

In terms of governance, AIIB has maintained a basic MDB governance model while making its own modifications, as others have before. Among these adaptations, AIIB’s Board of Governors has additional powers to allow AIIB to respond to changes over time, without forcing AIIB to fit new initiatives within unchangeable rules, provided there is sufficient consensus among the members.   AIIB’s Board of Directors follows the practice of a few MDBs and is non-resident, with clearly provided powers to approve policy and operations, delegate authority and supervise management; its oversight powers are highlighted. AIIB’s President has traditional powers with the express possibility of delegated authority, and is limited to two terms. The selection of the President and Vice-Presidents through an open, transparent and merit-based process sets a new legal standard.

As AIIB approaches its third anniversary in January 2019, its operations and governance will continue to be the subject of international attention, by members and others alike.

[1] AIIB-financed investment projects and its strategies and policies are posted on its website,

[2] This section is based on “Governance of the Asian Infrastructure Investment Bank in Comparative Context.” By Natalie Lichtenstein, in AIIB Yearbook of International Law (2018).