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<PAGE> PAGE 10
SIGNATURE GARY LEVINE
TITLE TREASURER
N-SAR Ques. 77B
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Bancroft Convertible Fund, Inc.
In planning and performing our audit of the financial statements and
financial highlights of Bancroft Convertible Fund, Inc.(the "Fund") for
the year ended September 30, 1999, we considered its internal control,
including control over safeguarding securities, in order to determine
our auditing procedures for the purpose of expressing our opinion on
the financial statements and financial highlights 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 and financial highlights 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 controls, errors or fraud may
occur and may 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 any specific internal control component does not reduce
to a relatively low level the risk that errors or fraud in amounts that
would be material in relation to the financial statements and financial
highlights 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,
including controls over safeguarding securities, that we consider to be
material weaknesses as defined above as of October 31, 1999.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
PricewaterhouseCoopers LLP
New York, New York
November 19, 1999
N-SAR Ques. 77Q1A: Exhibit 2
AMENDED AND RESTATED BY-LAWS OF BANCROFT CONVERTIBLE FUND, INC.
(Adopted Effective October 18, 1999)
ARTICLE I--OFFICES
Section 1. The registered office in the State of Delaware
shall be as stated in the Certificate of Incorporation or at
such other location in the State of Delaware to which the
registered office shall be changed by action of the Board of
Directors.
Section 2. The Corporation may also have offices at
such other places both within and without the State of
Delaware as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II--MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be
held at such time and place, within or without the State of
Delaware, as may be fixed from time to time by the Board of
Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be
held on the fourth Wednesday in February, or any other day as
may be fixed by the Board of Directors and stated in the notice
of the meeting, at which they shall elect, by a plurality vote,
Directors and shall transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting,
stating the place, date and hour of the meeting, shall be given
to each stockholder entitled to vote thereat not less than ten
nor more than sixty days before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of and the number of
shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, during
ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city, town
or village where the meeting is to be held and which place
shall be specified in the notice of the meeting, or, if not
specified, at the place where said meeting is to be held, and
the list shall be produced and kept at the time and place of
the meeting during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or
by the Certificate of Incorporation, may be called by the
Chairman of the Board of Directors or the President and shall
be called by the Chairman of the Board or President at the
request in writing of a majority of the Board of Directors, or
at the request in writing of the stockholders owning a majority
in amount of the entire capital stock of the Corporation issued
and outstanding and entitled to vote. Such request shall state
the purpose and purposes of the proposed meeting.
Section 6. Written notice of a special meeting of
stockholders, stating the place, date and hour of the meeting
and the purpose or purposes for which the meeting is called,
shall be given to each stockholder entitled to vote thereat,
not less than ten nor more than sixty days before the date
fixed for the meeting, provided, however, that the first
meeting of stockholders may be held on two days notice given to
each stockholder.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings
of the stockholders for the transaction of business except as
otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have
been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote of the meeting.
Section 9. When a quorum is present at any meeting, in all
matters other than the election of Directors, the affirmative
vote of the majority of shares present in person or represented
by proxy at such meeting and entitled to vote on the subject
matter shall be the act of the stockholders, unless the
question is one upon which, by express provision of the
statutes or of the Certificate of Incorporation, a different
vote is required in which case such express provision shall
govern and control the decision of such question. Directors
shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and
entitled to vote on the election of Directors.
Section 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for
each share of the capital stock having voting power held by
such stockholder, but no proxy shall be voted on after one year
from its date, unless the proxy provides for a longer period.
A proxy may be given to the Corporation by the stockholder or
by his or her duly authorized attorney in fact. A proxy may be
given to the Corporation through written, electronic,
computerized, telegram, cablegram, facsimile, telecommunication
or telex communication. A stockholder may duly authorize an
attorney in fact through written, electronic, telephonic,
computerized, telegram, cablegram, facsimile,
telecommunication, telex or oral communication or by any other
form of communication.
Section 11. Whenever the vote of the stockholders at a
meeting thereof is required or permitted to be taken in
connection with any corporate action by any provisions of the
statutes or of the Certificate of Incorporation, the meeting,
notice thereof and vote of stockholders may be dispensed with,
if all the stockholders who would have been entitled to vote
upon the action if such meeting were held shall consent in
writing to such corporate action being taken and the writing is
filed with the minutes of the proceedings of such holders.
ARTICLE III--DIRECTORS
Section 1. The number of Directors which shall constitute the
whole Board shall be determined from time to time by the Board
of Directors, but shall not be less than five. Beginning in
1972, the Directors shall be elected at the annual meeting of
the stockholders. For purposes of this Article III, a
potential Director will not be deemed to be qualified to serve
as a Director unless, after giving effect to his or her
election to the Board of Directors, at least two-thirds of the
Board of Directors would be Independent Directors, as defined
in Section 3 below.
Section 2. Any vacancy in the Board of Directors resulting
from death, resignation, increase in the authorized number of
Directors or otherwise, may be filled for the unexpired term by
a majority vote of the remaining Directors in office, though
less than a quorum; provided, that: (i) the Independent
Director requirements specified in Section 1 above are
satisfied, (ii) after the filling of any such vacancy at least
two-thirds of the Board of Directors then holding office shall
have been elected by the stockholders, and (iii) if at any time
less than a majority of the Directors then holding office were
elected by the stockholders, a stockholders' meeting shall
forthwith be called, to be held as promptly as possible, and in
any event within sixty days, for the purpose of electing an
entire new Board of Directors. If, at any time, fewer than
two-thirds of the Directors are Independent Directors, the
Board of Directors shall, at the next regularly scheduled
meeting or at any special meeting, consider appointing
additional Independent Directors to the Board. Each Director
elected shall hold office until his or her successor is elected
and qualified. Unless the Board of Directors adopts a policy
that provides otherwise, Directors need not be stockholders.
Section 3. For purposes of these By-Laws, a Director shall be
deemed to be an "Independent Director" if he or she: (i) is not
an "interested person" of the Corporation within the meaning of
the Investment Company Act of 1940, as amended, and the rules
and regulations promulgated thereunder and (ii) is not a former
officer or director of the Corporation's investment adviser or
its subsidiary.
Section 4. The business of the Corporation shall be managed by
its Board of Directors which may exercise all such powers of
the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by
these By-Laws directed or required to be exercised or done by
the stockholders.
Section 5. The Independent Directors of the Corporation, as
defined in Section 3 above, or a committee of Independent
Directors, may use the assets of the Corporation to retain
experts, including legal counsel other than regular legal
counsel to the Corporation and the Independent Directors, when
they deem it necessary to further the interests of the
Corporation's stockholders.
MEETING OF THE BOARD OF DIRECTORS
Section 6. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without
the State of Delaware.
Section 7. The first meeting of each newly elected Board of
Directors shall be held as soon as practicable following and at
the same place as the Annual Meeting of Stockholders and no
notice of such meeting shall be necessary to the newly elected
Directors in order legally to constitute the meeting, provided
a quorum shall be present. In the event such meeting is not
held at the said time and place, the meeting may be held at
such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of
Directors, or as shall be specified in a written waiver signed
by all of the Directors.
Section 8. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall
from time to time be determined by the Board.
Section 9. Special meetings of the Board may be called by the
Chairman of the Board or the President on one day's notice to
each Director, either personally or by mail or by telegram;
special meetings shall be called by the Chairman of the Board
or the President in like manner and on like notice on the
written request of two Directors. Personal notice shall
include notice given orally or by telephone.
Section 10. At all meetings of the Board, a majority of the
total number of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the
Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the
Certificate of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the Directors present
thereat may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum
shall be present.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors
or of any committee thereof may be taken without a meeting, if
all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or
committee.
Section 12. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and
such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
Section 13. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the
Directors of the Corporation, which, to the extent provided in
the resolution, shall have and may exercise the powers of the
Board of Directors in the management of the business and
affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by
the Board of Directors. In the absence or disqualification of
any member of such a committee, the member or members thereof
present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or
disqualified member.
Section 14. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when
required.
COMPENSATION OF DIRECTORS
Section 15. The Directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors. A
Director may be paid a fixed sum for attendance at each meeting
of the Board of Directors or a stated salary as Director, or
both such fixed sum and stated salary. No such payment shall
preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of
special or standing committees may be allowed like compensation
for attending committee meetings.
ARTICLE IV--NOTICES
Section 1. Notices to stockholders shall be in writing and
delivered personally or mailed to stockholders at their
addresses appearing on the books of the Corporation. Notices
to Directors shall be oral or by telephone, telegram or
facsimile, or in writing delivered personally or mailed to the
Directors at their addresses appearing on the books of the
Corporation. Notice by mail to stockholders or Directors shall
be deemed to be given at the time when the same shall be
mailed.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V--OFFICERS
Section 1. The officers of the Corporation shall include the
Chairman of the Board, the President, one or more Vice
Presidents (one of whom may be designated an Executive Vice
President), the Treasurer and the Secretary. Any two or more
offices may be held by the same person. Such officers shall be
elected by the Board of Directors each year at the organization
meeting held after the annual meeting of stockholders, each to
hold office until the meeting of the Board following the next
annual meeting of the stockholders and until his or her
successor shall have been duly elected and shall have
qualified, or until his or her death, or until he or she shall
have resigned, or have been removed, as hereinafter provided in
these By-Laws. The Board may from time to time elect, or
delegate to the Chairman of the Board or the President the
power to appoint, such officers (including one or more
Assistant Vice Presidents, one or more Assistant Treasurers and
one or more Assistant Secretaries) and such agents, as may be
necessary or desirable for the business of the Corporation.
Section 2. Any officer of the Corporation may resign at any
time by giving written notice of his or her resignation to the
Board, the Chairman of the Board, the President or the
Secretary. Any such resignation shall take effect at the time
specified therein, or, if the time when it shall become
effective shall not be specified therein, immediately upon its
receipt; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make
it effective.
Section 3. Any officer or agent of the Corporation may be
removed, either with or without cause, at any time, by the vote
of the majority of the entire Board at any meeting of the Board
or, except in the case of an officer or agent elected or
appointed by the Board, by the Chairman of the Board or by the
President.
Section 4. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled
for the unexpired portion of the term of the office which shall
be vacant, in the manner prescribed in these By-Laws for the
regular election or appointment to such office.
Section 5. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
THE CHAIRMAN
Section 6. The Chairman of the Board shall be the chief
executive officer of the Corporation and shall have the general
and active management of the business of the Corporation and
general and active supervision and direction over the other
officers, agents and employees and shall see that their duties
are properly performed. He or she shall, if present, preside
at each meeting of the stockholders and of the Board and shall
be an ex officio member of all committees of the Board. He or
she shall perform all duties incident to the office of Chairman
of the Board and chief executive officer and such other duties
as may from time to time be assigned to him or her by the
Board. In the case of the absence of the President or his or
her inability to act, the Chairman of the Board shall perform
the duties of the President and when so acting shall have all
the powers of, and be subject to all the restrictions upon, the
President. He or she shall perform all the duties incident to
the office of president and such other duties as from time to
time may be assigned to him or her by the Board or these By-
Laws.
THE PRESIDENT
Section 7. The President shall be the chief administrative
officer of the Corporation and shall have general and active
supervision and direction over the business and affairs of the
Corporation and over its several officers, subject, however, to
the direction of the Chairman of the Board and the control of
the Board. At the request of the Chairman of the Board, or in
the case of his or her absence or inability to act, the
President shall perform the duties of the Chairman of the Board
and when so acting shall have all the powers of, and be subject
to all the restrictions upon, the Chairman of the Board. He or
she shall perform all duties incident to the office of Chairman
of the Board and when so acting shall have all the powers of,
and be subject to all the restrictions upon, the Chairman of
the Board. He or she shall perform all duties incident to the
office of the Chairman of the Board and such other duties as
from time to time may be assigned to him or her by the Board,
the Chairman of the Board or these By-Laws.
VICE-PRESIDENTS
Section 8. In the absence of the President or in the event of
his or her refusal to act, and if a Vice President has been
appointed by the Board of Directors, the Vice President (or in
the event there be more than one Vice President, the Vice
Presidents in the order designated by the Directors, or in the
absence of any designation, then in the order of their
election) shall perform the duties of the President, and when
so acting, shall have all the powers of and be subject to all
the restrictions upon the President. Each Vice President shall
perform such other duties as from time to time may be assigned
to him or her by the Board, the Chairman of the Board or the
President.
THE TREASURER AND ASSISTANT TREASURER
Section 9. The Treasurer shall
(a) have charge and custody of, and be responsible for, all
the funds and securities of the Corporation, except those which
the Corporation has placed in the custody of a bank or trust
company pursuant to a written agreement designating such bank
or trust company as custodian of the property of the
Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, except
that such functions may be delegated to the Custodian of the
property of the Corporation pursuant to a written agreement;
(c) cause all moneys and other valuables to be deposited to
the credit of the Corporation;
(d) receive, and give receipts for, moneys due and payable to
the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board,
taking proper vouchers therefor; and
(f) in general, perform all the duties incident to the office
of Treasurer and such other duties as from time to time may be
assigned to him or her by the Board, the President, or the
Chairman of the Board.
Section 10. The Assistant Treasurer, or if there shall be more
than one, the Assistant Treasurers in the order determined by
the Board of Directors (or if there be no such determination,
then in order of their election) shall, in the absence of the
Treasurer or in the event of his or her inability or refusal to
act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The Secretary shall
(a) keep or cause to be kept in one or more books provided for
the purpose, the minutes of all meetings of the Board, the
committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock
certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all
other documents to be executed on behalf of the Corporation
under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and
filed are properly kept and filed; and
(e) in general, perform all the duties incident to the office
of Secretary and such other duties as from time to time may be
assigned to him or her by the Board, the President, or the
Chairman of the Board.
Section 12. The Assistant Secretary, or if there shall be more
than one, the Assistant Secretaries in the order determined by
the Board of Directors (or if there be no such determination,
then in order of their election) shall, in the absence of the
Secretary or in the event of his or her inability or refusal to
act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such
other powers as the Board of Directors may from time to time
prescribe.
ARTICLE VI--CERTIFICATES OF STOCK
Section 1. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of
the Corporation by, the Chairman of the Board, the President or
a Vice President and the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the Corporation,
and sealed with the manual or facsimile seal of the
Corporation, certifying the number of shares owned by him or
her in the Corporation.
Section 2. Where a certificate is signed (1) by a transfer
agent or an assistant transfer agent or (2) by a transfer clerk
acting on behalf of the Corporation and a registrar, the
signature of any such President, Vice President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary may be
facsimile. In case any officer or officers who have signed, or
whose facsimile signature or signatures have been used on, any
such certificate or certificates, shall cease to be such
officer or officers of the Corporation, whether because of
death, resignation or otherwise, before such certificate or
certificates have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had
not ceased to be such officer or officers of the Corporation.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or
destroyed, or upon receipt of other satisfactory evidence of
such loss, theft or destruction. When authorizing such issue
of a new certificate or certificates, the Board of Directors
may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his or her legal
representative, to advertise the same in such manner as it
shall require and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of
the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent
to corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for
the purpose of any other lawful action, the Board of Directors
may fix in advance a record date, which shall not be more than
sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned
meeting. Unless a record date is fixed by the Board of
Directors for the determination of stockholders entitled to
receive notice of, or to vote at, a stockholders' meeting,
transferees of shares which are transferred on the books of the
Corporation within twenty days next preceding the date of such
meeting shall not be entitled to receive notice of, or to vote
at, such meeting.
REGISTERED STOCKHOLDERS
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such
owner, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VII--GENERAL PROVISIONS
FISCAL YEAR
Section 1. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
SEAL
Section 2. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
REPORTS
Section 3. The Corporation shall transmit to its stockholders
semi-annual unaudited or audited reports of its financial
condition and annual reports audited by independent public
accountants.
DIVIDENDS
Section 4. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of
Directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property or in shares of the
capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 5. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for
dividends such sum or sums as the Directors from time to time,
in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation or
for such other purpose as the Directors shall think conducive
to the interest of the Corporation, and the Directors may
modify or abolish any such reserve in the manner in which it
was created.
ARTICLE VIII--INDEMNIFICATION
The Corporation shall indemnify its officers and Directors to
the extent permitted by Delaware law as amended from time to
time, provided, however, that no officer or Director shall be
protected against any liability to the corporation or its
stockholders to which he or she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
or her office.
ARTICLE IX--AMENDMENTS
These By-Laws may be amended or repealed, or new By-Laws may be
adopted by the Board of Directors at any meeting thereof;
provided, however, that notice of such meeting shall have been
given as provided in these By-Laws, which notice shall mention
that amendment or repeal of the By-Laws, or the adoption of new
By-Laws, is one of the purposes of such meeting. Any such By-
Laws adopted by the Board may be amended or repealed, or new
By-Laws may be adopted, by vote of the stockholders of the
Corporation, at any annual or special meeting thereof;
provided, however, that the notice of such meeting shall have
been given as provided in these By-Laws, which notice shall
mention that amendment or repeal of these By-Laws, or the
adoption of new By-Laws, is one of the purposes of such
meeting.
4
PHL_A 1295618 v 3
PHL_A 1295618 v 3
N-SAR Ques. 77Q1B: Exhibit 3
The following are additions to the Charter of Bancroft Convertible
Fund, Inc.
NOMINATING AND ADMINISTRATION COMMITTEE
CHARTER
Nominating and Administration Committee Membership
The Nominating and Administration Committee shall be composed
entirely of independent directors.
Board Nominations and Functions
1. The Committee shall make nominations for independent director
membership on the Board of Directors. The Committee shall
evaluate candidates' qualifications for Board membership and their
independence from the Funds' investment adviser and other
principal service providers. Persons selected must be independent
in terms of both the letter and the spirit of the Investment Company
Act of 1940. The Committee shall also consider the effect of any
relationships beyond those delineated in the 1940 Act that might
impair independence, e.g., business, financial or family
relationships with managers or service providers. If members of
the Committee do not unanimously agree to nominate an
incumbent independent director for re-election to the Board of
Directors, the Committee shall submit the issue of nomination of
such person for re-election to the independent directors as a group.
2. The Committee shall periodically review Board governance
procedures and shall recommend any appropriate changes to the
full Board of Directors.
3. The Committee shall periodically review the composition of the
Board of Directors to determine whether it may be appropriate to
add individuals with different backgrounds or skill sets from those
already on the Board.
4. The Committee shall periodically review director compensation
and shall recommend any appropriate changes to the independent
directors as a group.
Committee Nominations and Functions
1. The Committee shall make nominations for membership on all
committees and shall review committee assignments at least
annually.
2. The Committee shall review as necessary the responsibilities of
any committees of the Board, whether there is a continuing need
for each committee, whether there is a need for additional
committees of the Board, and whether committees should be
combined or reorganized. The Committee shall make
recommendations for any such action to the full Board.
Other Powers and Responsibilities
1. The Committee shall monitor the performance of legal counsel
employed by the Funds and the independent directors, and shall be
responsible for the supervision of counsel for the independent
directors.
2. The Committee shall have the resources and authority appropriate
to discharge its responsibilities, including authority to retain
special counsel and other experts or consultants at the expense of
the appropriate Fund(s).
3. The Committee shall review this Charter at least annually and
recommend any changes to the full Board of Directors.
AUDIT COMMITTEE CHARTER
1. The Audit Committee shall be composed entirely of independent
directors.
2. The purposes of the Audit Committee are:
(a) to oversee the Funds' accounting and financial reporting
policies and practices, its internal controls and, as
appropriate, the internal controls of certain service
providers;
(b) to oversee the quality and objectivity of the Funds'
financial statements and the independent audit thereof; and
(c) to act as a liaison between the Funds' independent auditors
and the full Board of Directors.
The function of the Audit Committee is oversight; it is
management's responsibility to maintain appropriate systems for
accounting and internal control, and the auditor's responsibility to
plan and carry out a proper audit.
3. To carry out its purposes, the Audit Committee shall have the
following duties and powers:
(a) to recommend the selection, retention or termination of
auditors and, in connection therewith, to evaluate the
independence of the auditors, including whether the
auditors provide any consulting services to the manager,
and to receive the auditors' specific representations as to
their independence;
(b) to meet with the Funds' independent auditors, including
private meetings, as necessary (i) to review the
arrangements for and scope of the annual audit and any
special audits; (ii) to discuss any matters of concern
relating to the Funds' financial statements, including any
adjustments to such statements recommended by the
auditors, or other results of said audit(s); (iii) to consider
the auditors' comments with respect to the Funds' financial
policies, procedures and internal accounting controls and
management's responses thereto; and (iv) to review the
form of opinion the auditors propose to render to the Board
and shareholders;
(c) to consider the effect upon the Funds of any changes in
accounting principles or practices proposed by management
or the auditors;
(d) to review the fees charged by the auditors for audit and
non-audit services;
(e) to investigate improprieties or suspected improprieties in
fund operations; and
(f) to report its activities to the full Board on a regular basis
and to make such recommendations with respect to the
above and other matters as the Committee may deem
necessary or appropriate.
4. The Committee shall meet on a regular basis and is empowered to
hold special meetings as circumstances require.
5. The Committee shall regularly meet with the Treasurer of the
Funds.
6. The Committee shall have the resources and authority appropriate
to discharge its responsibilities, including the authority to retain
special counsel and other experts or consultants at the expense of
the appropriate Fund(s).
7. The Committee shall review this Charter at least annually and
recommend any changes to the full Board of Directors.
PHL_A 1305330 v 1 4
PHL_A 1305330 v 1
