At its 165th meeting, the CSO endorsed the COST Grant System (CGS). The COST Grant System provides a flexible approach to financing the following COST Action activities in accordance with the COST governing rules: Meetings, Short Term Scientific Missions (STSMs), Training Schools and Dissemination. Any other agreed COST Action activity (e.g. participation of institutions from non-COST countries, including the STSMs linked to Reciprocal Agreements, the final publication and Conference Grant for Early Stage Researchers) is managed under the Pay-as-you-go System; relevant terms and conditions are provided in the COST Vademecum (Part A). The COST Grant System provides a flexible approach to financing COST Action activities in accordance with the COST governing rules. COST is financed through the Seventh Framework Programme (FP7) of the European Union and therefore needs to meet the FP7 contractual obligations and to fully comply with the EU financial regulations. The COST Grant Agreement and the rules and procedures described hereafter were drawn up taking into consideration these obligations.