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<PAGE> PAGE 2
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SIGNATURE MARY JANE MALONEY
TITLE MANAGER
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<NAME> THE MEXICO EQUITY AND INCOME FUND, INC.
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EXHIBIT INDEX
EXHIBIT A: Attachment to item 77B: Accountant's report on internal
control
EXHIBIT B: Attachment to item 77Q1: Amended and Restated By-Laws
- ----------------------------------------------------------------------
EXHIBIT A:
Report of Independent Accountants
To the Shareholders and Board of Directors of
The Mexico Equity and Income Fund, Inc.
In planning and performing our audit of the financial statements of The Mexico
Equity and Income Fund, Inc. (the "Fund") for the year ended July 31, 1998, we
considered its internal control, including control activities for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control
to future periods is subject to the risk that it may become inadequate because
of changes in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving internal control and its operation, including controls for
safeguarding securities, that we consider to be material weaknesses as defined
above as of July 31, 1998.
This report is intended solely for the information and use of management and
the Board of Directors of the Fund and the Securities and Exchange Commission.
PricewaterhouseCoopers LLP
New York, New York
September 22, 1998
EXHIBIT B:
THE MEXICO EQUITY AND INCOME FUND, INC.
Amended and Restated By-Laws
June 30, 1998
ARTICLE I
Stockholders
Section 1. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Maryland or at
such other place within the United States as may from time to time be
designated by the Board of Directors and stated in the notice of such meeting.
Section 2. Annual Meetings. The annual meeting of the stockholders of the
Corporation shall be held during the month of May, or such other month as the
Board of Directors may select, in each year, on such date and at such hour as
may from time to time be designated by the Board of Directors and stated in
the notice of such meeting, for the purpose of electing directors for the
ensuing year and for the transaction of such other business as may properly be
brought before the meeting.
Section 3. Special or Extraordinary Meetings. Special or extraordinary
meetings of the stockholders for any purpose or purposes may be called by the
Chairman, the President or a majority of the Board of Directors, and shall be
called by the Secretary upon receipt of the request in writing signed by
stockholders holding not less than 50% of the common stock issued and
outstanding and entitled to vote thereat. Such request shall state the
purpose or purposes of the proposed meeting. The Secretary shall inform such
stockholders of the reasonably estimated costs of preparing and mailing such
notice of meeting and upon payment to the Corporation of such costs, the
Secretary shall give notice stating the purpose or purposes of the meeting as
required in this Article and By-Law to all stockholders entitled to notice of
such meeting. No special meeting need be called upon the request of the
holders of shares entitled to cast less than a majority of all votes entitled
to be cast at such meeting to consider any matter which is substantially the
same as a matter voted upon at any special meeting of stockholders held during
the preceding twelve months.
Section 4. Notice of Meetings of Stockholders. Not less than ten days' and
not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the general nature of
the business proposed to be transacted at any special or extraordinary
meeting), shall be given to each stockholder entitled to vote thereat by
leaving the same with such stockholder or at such stockholder's residence or
usual place of business or by mailing it, postage prepaid, and addressed to
such stockholder at such stockholder's address as it appears upon the books of
the Corporation. If mailed, notice shall be deemed to be given when deposited
in the United States mail addressed to the stockholder as aforesaid.
No notice of the time, place or purpose of any meeting of stockholders need be
given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with the records of the
meeting, either before or after the holding thereof, waives such notice.
Section 5. Record Dates. The Board of Directors may fix, in advance, a
date not exceeding sixty days preceding the date of any meeting of
stockholders, any dividend payment date or any date for the allotment of
rights, as a record date for the determination of the stockholders entitled to
notice of and to vote at such meeting or entitled to receive such dividends or
rights, as the case may be; and only stockholders of record on such date shall
be entitled to notice of and to vote at such meeting or to receive such
dividends or rights, as the case may be. In the case of a meeting of
stockholders, such date shall not be less than ten days prior to the date
fixed for such meeting.
Section 6. Quorum, Adjournment of Meetings. The presence in person or by
proxy of the holders of record of a majority of the shares of the common stock
of the Corporation issued and outstanding and entitled to vote thereat shall
constitute a quorum at all meetings of the stockholders except as otherwise
provided in the Articles of Incorporation. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the holders of a
majority of the stock present in person or by proxy shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until the requisite amount of stock entitled to vote at such
meeting shall be present. At such adjourned meeting at which the requisite
amount of stock entitled to vote thereat shall be represented any business may
be transacted which might have been transacted at the meeting as originally
notified.
Section 7. Voting and Inspectors. At all meetings, stockholders of record
entitled to vote thereat shall have one vote for each share of common stock
standing in his name on the books of the Corporation (and such stockholders of
record holding fractional shares, if any, shall have proportionate voting
rights) on the date for the determination of stockholders entitled to vote at
such meeting, either in person or by proxy appointed by instrument in writing
subscribed by such stockholder or his duly authorized attorney.
All elections shall be had and all questions decided by a majority of the
votes cast at a duly constituted meeting, except as otherwise provided by
statute or by the Articles of Incorporation or by these By-Laws.
At any election of Directors, the Chairman of the meeting may, and upon the
request of the holders of ten percent (10%) of the stock entitled to vote at
such election shall, appoint two inspectors of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the best
of their ability, and shall after the election make a certificate of the
result of the vote taken. No candidate for the office of Director shall be
appointed such Inspector.
Section 8. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman, or if he is not present,
by the President, or if he is not present, by a Vice-President, or if none of
them is present, by a Chairman to be elected at the meeting. The Secretary of
the Corporation, if present, shall act as a Secretary of such meetings, or if
he is not present, an Assistant Secretary shall so act; if neither the
Secretary nor the Assistant Secretary is present, then the meeting shall elect
its Secretary.
Section 9. Concerning Validity of Proxies, Ballots, etc. At every meeting
of the stockholders, all proxies shall be received and taken in charge of and
all ballots shall be received and canvassed by the Secretary of the meeting,
who shall decide all questions touching the qualification of voters, the
validity of the proxies and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed by the Chairman of the
meeting, in which event such inspectors of election shall decide all such
questions.
Section 10. Action Without Meeting. Any action to be taken by stockholders
may be taken without a meeting if (1) all stockholders entitled to vote on the
matter consent to the action in writing, (2) all stockholders entitled to
notice of the meeting but not entitled to vote at it sign a written waiver of
any right to dissent and (3) said consents and waivers are filed with the
records of the meetings of stockholders. Such consent shall be treated for
all purposes as a vote at the meeting.
Section 11. Matters To Be Acted On at Stockholders Meetings
(a) Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board of Directors and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders only if made (i) pursuant to the Corporation's
notice of meeting, (ii) by or at the direction of the Board of Directors or
(iii) by any stockholder of the Corporation who was a stockholder of record at
the time of giving of notice provided for in this Section 11(a), who is
entitled to vote at the meeting and who complied with the notice procedures
set forth in this Section 11(a).
(2) For nominations or other business to be properly brought before an annual
meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this
Section 11, the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the tenth day following
the day on which public announcement of the date of such meeting is first
made. Such stockholder's notice shall set forth (i) as to each person whom
the stockholder proposes to nominate for election or reelection as a director,
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act") (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and of the beneficial owners, if any, on whose behalf the proposal
is made; and (iii) as to the stockholder giving the notice and the beneficial
owners, if any, on whose behalf the nomination or proposal is made, (x) the
name and address of such stockholder, as they appear on the Corporation's
books, and of such beneficial owners, if any, and (y) the class and number of
shares of stock of the Corporation which are owned beneficially and of record
by such stockholder and such beneficial owners, if any.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of
this Section 11 to the contrary, in the event that the number of directors to
be elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the Corporation at least 70 days
prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by paragraph (a)(2) of this Section 11 shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary
at the principal executive offices of the Corporation not later than the close
of business on the tenth day following the day on which such public
announcement is first made by the Corporation.
(b) Special Meetings of Stockholders.
(1) Only such business shall be conducted at a special meeting of stockholders
as shall have been brought before the meeting pursuant to the Corporation's
notice of meeting.
(2) Nominations of persons for election to the Board of Directors may be made
at a special meeting of stockholders at which directors are to be elected (i)
pursuant to the Corporation's notice of meeting, (ii) by or at the direction
of the Board of Directors or (iii) provided that the Board of Directors has
determined that directors shall be elected at such special meeting, by any
stockholder of the Corporation who (x) has given timely notice thereof meeting
the requirements of Section 11(b)(3), (y) is a stockholder of record at the
time of giving of such notice, and (z) is entitled to vote at the meeting.
(3) To be timely, a stockholder's notice referred to in Section 11(b)(2) must
have been delivered to the Secretary of the Corporation at the principal
executive offices of the Corporation not earlier than the 90th day prior to
such special meeting and not later than the close of business on the later of
the 60th day prior to such special meeting or the tenth day following the day
on which public announcement is made of the date of the special meeting and of
the nominees proposed by the Board of Directors to be elected at such meeting.
Such stockholder's notice shall set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Exchange Act (including such
person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); and (ii) as to the stockholder
giving the notice and the beneficial owners, if any, on whose behalf the
nomination or proposal is made, (x) the name and address of such stockholder,
as they appear on the Corporation's books, and of such beneficial owners, if
any, and (y) the class and number of shares of stock of the Corporation which
are owned beneficially and of record by such stockholder and such beneficial
owners, if any.
(c) Declaration Regarding Improper Business. The Chairman of an annual or
special meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in
accordance with the provisions of this Section 11, and if he should so
determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
ARTICLE II
Board of Directors
Section 1. Number and Tenure of Office. The business and affairs of the
Corporation shall be conducted and managed by a Board of Directors of not more
than fourteen Directors or less than the number prescribed by the Maryland
General Corporation Law, as may be determined from time to time by vote of a
majority of the Directors then in office. Directors need not be stockholders.
Section 2. Vacancies. In case of any vacancy in the Board of Directors
through death, resignation or other cause, other than an increase in the
number of Directors, a majority of the remaining Directors, although a
majority is less than a quorum, by an affirmative vote, may elect a successor
to hold office until the next annual meeting of stockholders or until his
successor is chosen and qualifies.
Section 3. Increase or Decrease in Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of Directors and may elect Directors to fill the vacancies created by
any such increase in the number of Directors until the next annual meeting or
until their successors are duly chosen and qualified. The Board of Directors,
by the vote of a majority of the entire Board, may likewise decrease the
number of Directors to a number not less than the number prescribed by the
Maryland General Corporation Law.
Section 4. Place of Meeting. The Directors may hold their meetings, have
one or more offices, and keep the books of the Corporation, outside the State
of Maryland, at any office or offices of the Corporation or at any other place
as they may from time to time by resolution determine, or in the case of
meetings, as they may from time to time by resolution determine or as shall be
specified or fixed in the respective notices or waivers of notice thereof.
Section 5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and on such notice as the Directors may from time
to time determine.
The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of the stockholders for the election of
Directors.
Section 6. Special Meetings; Waiver of Notice. Special meetings of the
Board of Directors may be held from time to time upon call of the Chairman,
the President, the Secretary or two or more of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed to each
Director not less than one day before such meeting. No notice need be given
to any Director who attends in person or to any Director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Such notice or waiver of notice need not
state the purpose or purposes of such meeting.
Section 7. Quorum. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that if the
Board of Directors consists of two or more Directors, a quorum shall in no
case be less than two Directors. If at any meeting of the Board there shall
be less than a quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The act of
the majority of the Directors present at any meeting at which there is a
quorum shall be the act of the Directors, except as may be otherwise
specifically provided by statute or by the Articles of Incorporation or by
these By-Laws.
Section 8. Executive Committee. The Board of Directors may, by the
affirmative vote of a majority of the whole Board, appoint from the Directors
an Executive Committee to consist of such number of Directors as the Board may
from time to time determine. The Chairman of the Committee shall be elected
by the Board of Directors. The Board of Directors by such affirmative vote
shall have power at any time to change the members of such Committee and may
fill vacancies in the Committee by election from the Directors. When the
Board of Directors is not in session, to the extent permitted by law the
Executive Committee shall have and may exercise any or all of the powers of
the Board of Directors in the management of the business and affairs of the
Corporation. The Executive Committee may fix its own rules of procedure, and
may meet when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary to
constitute a quorum. During the absence of a member of the Executive
Committee, the remaining members may appoint a member of the Board of
Directors to act in his place.
Section 9. Other Committees. The Board of Directors, by the affirmative
vote of a majority of the whole Board, may appoint from the Directors other
committees which shall in each case consist of such number of Directors (which
may be as few as one) and shall have and may exercise such powers as the Board
may determine in the resolution appointing them. A majority of all the
members of any such committee may determine its action and fix the time and
place of its meetings, unless the Board of Directors shall otherwise provide.
The Board of Directors shall have power at any time to change the members and
powers of any such committee, to fill vacancies and to discharge any such
committee.
Section 10. Telephone Meetings. Members of the Board of Directors or a
committee of the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Subject to
the provisions of the Investment Company Act of 1940, as amended,
participation in a meeting by these means constitutes presence in person at
the meeting.
Section 11. Action Without a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting, if a written consent to such action is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the Board or
such committee.
Section 12. Compensation of Directors. No Director shall receive any
stated salary or fees from the Corporation for his services as such if such
Director is, otherwise than by reason of being such Director, an interested
person (as such term is defined by the Investment Company Act of 1940, as
amended) of the Corporation or of its investment manager, investment adviser
or principal underwriter. Except as provided in the preceding sentence,
Directors shall be entitled to receive such compensation from the Corporation
for their services as may from time to time be voted by the Board of
Directors. Notwithstanding anything herein to the contrary, the Corporation
may reimburse any Director for travel expenses incurred by such Director to
the extent such expenses relate to attendance at meetings of the Board of
Directors or any committee thereof.
ARTICLE III
Officers
Section 1. Executive Officers. The executive officers of the Corporation
shall be chosen by the Board of Directors as soon as may be practicable after
the annual meeting of the stockholders. These may include a Chairman (who
shall be a Director) and shall include a President (who shall be a Director),
one or more Vice-Presidents (the number thereof to be determined by the Board
of Directors), a Secretary and a Treasurer. The Board of Directors or the
Executive Committee may also in its discretion appoint Assistant Secretaries,
Assistant Treasurers and other officers, agents and employees, who shall have
such authority and perform such duties as the Board or the Executive Committee
may determine. The Board of Directors may fill any vacancy which may occur in
any office. Any two offices, except those of President and Vice-President,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity, if such instrument is
required by law or these By-Laws to be executed, acknowledged or verified by
two or more officers.
Section 2. Term of Office. The term of office of all officers shall be one
year and until their respective successors are chosen and qualified. Any
officer may be removed from office at any time with or without cause by the
vote of a majority of the whole Board of Directors. Any officer may resign
his office at any time by delivering a written resignation to the Board of
Directors, the President, the Secretary, or any Assistant Secretary. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Section 3. Powers and Duties. The officers of the Corporation shall have
such powers and duties as generally pertain to their respective offices, as
well as such powers and duties as may from time to time be conferred by the
Board of Directors or the Executive Committee.
Section 4. Surety Bonds. The Board of Directors may require any officer or
agent of the Corporation to execute a bond (including, without limitation, any
bond required by the Investment Company Act of 1940, as amended, and the rules
and regulations of the Securities and Exchange Commission) to the Corporation
in such sum and with such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of his duties to the
Corporation, including responsibility for negligence and for the accounting of
any of the Corporation's property, fund or securities that may come into his
hands.
ARTICLE IV
Capital Stock
Section 1. Certificates for Shares. Each stockholder of the Corporation
shall be entitled to a certificate or certificates for the full shares of
stock of the Corporation owned by him in such form as the Board may from time
to time prescribe.
Section 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person
or by his duly authorized attorney or legal representative, upon surrender and
cancellation of certificates, if any, for the same number of shares, duly
endorsed or accompanied by proper instruments of assignment and transfer, with
such proof of the authenticity of the signature as the Corporation or its
agents may reasonably require; in the case of shares not represented by
certificates, the same or similar requirements may be imposed by the Board of
Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation, containing
the names and addresses of the stockholders and the number of shares held by
them respectively, shall be kept at the principal offices of the Corporation
or, if the Corporation employs a Transfer Agent, at the offices of the
Transfer Agent of the Corporation.
Section 4. Transfer Agents and Registrars. The Board of Directors may from
time to time appoint or remove transfer agents and/or registrars of transfers
of shares of stock of the Corporation, and it may appoint the same person as
both transfer agent and registrar. Upon any such appointment being made all
certificates representing shares of capital stock thereafter issued shall be
countersigned by one of such transfer agents or by one of such registrars of
transfers or by both and shall not be valid unless so countersigned. If the
same person shall be both transfer agent and registrar, only one
countersignature by such person shall be required.
Section 5. Lost, Stolen or Destroyed Certificates. The Board of Directors
or the Executive Committee may determine the conditions upon which a new
certificate of stock of the Corporation of any class may be issued in place of
a certificate which is alleged to have been lost, stolen or destroyed; and
may, in its discretion, require the owner of such certificate or such owner's
legal representative to give bond, with sufficient surety, to the Corporation
and each Transfer Agent, if any, to indemnify it and each such Transfer Agent
against any and all loss or claims which may arise by reason of the issue of a
new certificate in the place of the one so lost, stolen or destroyed.
ARTICLE V
Corporate Seal
The Board of Directors may provide for a suitable corporate seal, in such form
and bearing such inscriptions as it may determine.
ARTICLE VI
Fiscal Year and Accountant
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
Section 2. Accountant. The Corporation shall employ an independent public
accountant or a firm of independent public accountants as its Accountants to
examine the accounts of the Corporation and to sign and certify financial
statements filed by the Corporation. The employment of the Accountants shall
be conditioned upon the right of the Corporation to terminate the employment
forthwith without any penalty by vote of a majority of the outstanding voting
securities at any stockholders' meeting.
ARTICLE VII
Indemnification
The Corporation shall indemnify directors, officers, employees and agents of
the Corporation against judgments, fines, settlements and expenses to the
fullest extent authorized and in the manner permitted by applicable federal
and state law.
ARTICLE VIII
Amendment of By-Laws
The By-Laws of the Corporation may be altered, amended, added to or repealed
by the stockholders or by majority vote of the entire Board of Directors; but
any such alteration, amendment, addition or repeal of the By-Laws by action of
the Board of Directors may be altered or repealed by stockholders.
