The signing of the Articles of Agreement or the mini-constitution for the AIIB at the Great Hall of the People in Beijing wraps up six-months of intense negotiations paving the way for the bank to become operational before the end of this year.
Australia was the first country to sign the formal charter creating the AIIB's legal framework that would determine the number of shares that each member would get and the bank's initial capital.
Seven other prospective founding members, including Denmark, Kuwait, Malaysia, Philippines, Poland, South Africa and Thailand are still waiting for domestic approval before signing.
The AIIB led by China aims to fund energy, transport and infrastructure projects across Asia.
Chinese President Xi Jinping met the delegates after the signing ceremony.
He said that much progress has been made towards the establishment of the Asian Infrastructure Investment Bank since the idea was first proposed in October, 2013.
"We are very happy today to see representatives of the prospective members of AIIB gathered together. This shows a spirit of unity and cooperation, openness and inclusion. I trust that if we continue with this spirit of multilateral cooperation, then the preparation work for the Asian Infrastructure Investment Bank will be conducted successfully."
The bank will have an initial share capital of 100 billion US dollars and China will contribute 29.7 billion US Dollars out of that.
This makes China the largest shareholder in the bank with a 30 percent stake. This will also give China 26 percent of the total vote.
Neighboring Asian heavyweight India is the second-biggest shareholder, but with just over an 8 percent stake. Russia and Germany will become third and fourth biggest contributors.
According to its legal framework, Seventy-five percent of the bank's shares will be distributed among Asian countries, while the other 25 percent will be assigned to members outside the region like the UK and France and many Latin American and African members.
The Articles of Association also specify that the bank's president must come from the Asian region and will serve a maximum of two consecutive five-year terms. The bank will be headquartered in Beijing.
Chinese Finance Minister Lou Jiwei says he was confident that the AIIB could start functioning before the end of this year.
"I'm confident that through our united cooperation and unremitting effort, we will successfully accomplish the next stage of preparation work as scheduled, so that the AIIB will be formally established by the end of this year and be put into operation at an earlier date than initially thought."
Chinese authorities say the new bank will complement other established global lenders, like the World Bank and the International Monetary Fund.
The launch of the Beijing-proposed bank has been hailed as a diplomatic and strategic win for China.
For CRI I'm Poornima Weerasekara.
