China's top legislature ratified the Asian Infrastructure Investment Bank (AIIB) agreement on Wednesday, which establishes the legal framework for the bank. 

Lawmakers voted on the agreement at the closing meeting of the bimonthly session of the National People's Congress (NPC) Standing Committee. The ratification is a significant step toward the bank's formal establishment, which is slated for the end of 2015.

The China-backed multilateral development institution is tasked with financing infrastructure construction across Asia. As of October, 54 of the bank's 57 prospective founding members had signed the agreement, while the other three are expected to sign before the end of 2015. All prospective members should have their legislatures ratify the agreement before the end of 2016 to formally become founding members.

As long as legislative approval is obtained for at least 10 signatories and no less than 50 percent of members' capital contribution, the agreement will become effective, Finance Minister Lou Jiwei told lawmakers. He added that Myanmar, Singapore and Brunei have already received legislative approval.

The 60-article agreement outlines the financial share of each founding member and lays out rules for the bank's policymaking, governance structure, and business and operational systems.

The AIIB will promote the sustainable development of the Asian economy and improve infrastructure connections, Lou said.

The bank's $100 billion in authorized capital will be invested in sectors including energy, transportation, urban construction and logistics, as well as education and health care.

Lou said the bank will cooperate with other multilateral and bilateral development organizations. He noted that the establishment of the AIIB shows China's commitment to creating an open, just and transparent international economic governance system, and it will provide a new platform for cooperation among member states.

Based on capital contribution, China holds a voting stake of around 26 percent in the AIIB, the highest of all members. Asian members' financial contributions are three times that of non-Asian members. As new members join, all founding members' shares and voting stakes will be "gradually diluted," Lou explained.

Jin Liqun, president-designate of the institution, will be formally elected AIIB president at the first meeting of the board of directors scheduled to take place after the formal establishment of the bank, Liu said.