Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
The Herzfeld Caribbean Basin Fund, Inc.
---------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
THE HERZFELD CARIBBEAN BASIN FUND, INC.
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 18, 2004
-------------------------------------
MIAMI, FLORIDA
AUGUST 31, 2004
TO THE STOCKHOLDERS OF
THE HERZFELD CARIBBEAN BASIN FUND, INC.:
The Annual Meeting of Stockholders of The Herzfeld Caribbean Basin Fund,
Inc. (the "Fund") will be held on November 18, 2004, at 2:00 p.m. Eastern time,
at the offices of Kaufman, Rossin & Co., P.A., 2699 S. Bayshore Drive, Miami, FL
33133, for the following purposes:
(1) the election of one Class II director; and
(2) to transact such other business as may properly come before the
meeting and any adjournments thereof.
The subjects referred to above are discussed in detail in the Proxy
Statement attached to this notice. Each stockholder is invited to attend the
Annual Meeting of Stockholders in person. Stockholders of record at the close of
business on August 20, 2004, have the right to vote at the meeting. If you
cannot be present at the meeting, we urge you to fill in, sign, and promptly
return the enclosed proxy in order that the meeting can be held without
additional expense and a maximum number of shares may be voted.
CECILIA GONDOR
Secretary
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY, DATE, SIGN AND
RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND
NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION
IN RETURNING YOUR PROXY PROMPTLY. YOUR PROXY IS REVOCABLE AT ANY TIME PRIOR TO
ITS USE.
--------------------------------------------------------------------------------
THE HERZFELD CARIBBEAN BASIN FUND, INC.
P.O. BOX 161465, MIAMI, FLORIDA 33116
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
NOVEMBER 18, 2004
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of The Herzfeld Caribbean Basin Fund, Inc. (the
"Fund") for use at the Annual Meeting of Stockholders (the "Annual Meeting") to
be held at the offices of Kaufman, Rossin & Co., P.A., 2699 S. Bayshore Drive,
Miami, FL 33133, on November 18, 2004 at 2:00 p.m Eastern time.
Proxies may be solicited by mail, telephone, telegraph and personal
interview. The Fund has also requested brokers, dealers, banks or voting
trustees, or their nominees to forward proxy material to the beneficial owners
of stock of record. You may revoke your proxy at any time prior to the exercise
thereof by submitting a written notice of revocation or subsequently executed
proxy to the Secretary of the meeting. Signing and mailing the proxy will not
affect your right to give a later proxy or to attend the meeting and vote your
shares in person. The cost of soliciting proxies will be paid by the Fund. This
proxy statement is expected to be distributed to stockholders on or about August
31, 2004.
THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE THE NUMBER OF SHARES
REPRESENTED THEREBY AS DIRECTED OR, IN THE ABSENCE OF SUCH DIRECTION, FOR THE
NOMINEE FOR DIRECTOR AND TO TRANSACT SUCH OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
On August 20, 2004, the date for determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting, or any adjournment thereof,
there were issued and outstanding 1,677,636 shares of Common Stock of the Fund,
each entitled to one vote, constituting all of the Fund's then outstanding
securities.
At the Annual Meeting, a quorum shall consist of the holders of a majority
of the outstanding shares of the Common Stock of the Fund entitled to vote at
the meeting. If a quorum is present, a plurality of all votes cast at the Annual
Meeting shall be sufficient for the election of a director (Proposal 1). Under
Maryland law, abstentions and broker non-votes will be included for purposes of
determining whether a quorum is present at the Annual Meeting, but will be
treated as votes not cast, and therefore, will not be counted for purposes of
determining whether matters to be voted upon at the Annual Meeting have been
approved.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED JUNE 30, 2004, AND THE MOST RECENT SEMI-ANNUAL REPORT
PRECEDING THE ANNUAL REPORT TO ANY STOCKHOLDER REQUESTING SUCH REPORTS.
REQUESTS FOR THE ANNUAL REPORT OR SEMI-ANNUAL REPORT SHOULD BE MADE IN
WRITING TO THE FUND AT THE ADDRESS SET FORTH ABOVE OR BY CALLING THE SECRETARY
OF THE FUND, CECILIA GONDOR, AT 800-854-3863 OR 305-271-1900.
ELECTION OF DIRECTOR
(PROPOSAL 1)
One director is to be elected at the Annual Meeting. Pursuant to the
Fund's By-Laws, the directors are classified into three classes with respect to
the year of expiration of their terms of office. Because the Fund's Class II
director's term of office will expire in 2004, the Annual Meeting is being held
for the election of that director. The Class I and Class III directors' terms of
office will expire in 2006 and 2005, respectively.
If authority is granted on the accompanying proxy card to vote in the
election of directors, it is the intention of the persons named in the proxy to
vote at the Annual Meeting for the election of the nominee named below, who has
consented to being named in the proxy statement and to serve if elected. If a
nominee is unavailable to serve for any reason, the person named as proxy will
vote for such other nominee or nominees selected by the Board of Directors, or
the Board may reduce the number of directors as provided in the Fund's By-Laws.
The Fund currently knows of no reason why the nominee listed below would be
unable or unwilling to serve if elected.
As of August 31, 2004, the Fund's Board of Directors consisted of five
members. The Class II director of the Fund, Ms. Ann S. Lieff, is the only
nominee for election, and her current term as director will expire on the date
of the Annual Meeting or when her successor is elected and qualifies. The
nominee would serve until her successor has been elected and qualified.
Certain information regarding the nominee as well as the current directors
and executive officers of the Fund is set forth below.
NOMINEE FOR DIRECTOR - "INDEPENDENT PERSON"
Name, Address, Age Position(s) Term of Office and Principal Occupation(s) Number of Portfolios Other
Held Length of Time Served During Past 5 Years In Complex Overseen Directorships
with Fund by Director held by Nominee
------------------------------------------------------------------------------------------------------------------------------
Ann S. Lieff Director 1998 to present President of the Lieff Company, 1 Hastings
c/o The Herzfeld Caribbean a management consulting firm Entertainment, Inc.;
Basin Fund, Inc. that offers business solutions, Claire's Stores, Inc.;
PO Box 161465 strategies and CEO mentoring to Mayors Jewelers,
Miami, FL 33116 corporations and women/family Inc.
Age: 52 owned businesses, 1998-present;
former CEO Spec's Music 1980-
1998, a retailer of recorded music.
CURRENT DIRECTORS AND OFFICERS
Name, Address, Age Position(s) Term of Office and Principal Occupation(s) Number of Portfolios Other
Held Length of Time Served During Past 5 Years In Complex Overseen Directorships
with Fund by Director Held by Director
------------------------------------------------------------------------------------------------------------------------------
OFFICERS:
THOMAS J. HERZFELD* President, 1993 to present Chairman and President of 2 The Cuba Fund, Inc.
PO Box 161465 Chairman, Thomas J. Herzfeld & Co., Inc., (in registration)
Miami, FL 33116 Director a broker dealer, and
Age: 59 Thomas J. Herzfeld Advisors, Inc.
CECILIA L. GONDOR Secretary, 1993 to present Executive Vice President of N/A
PO Box 161465 Treasurer Thomas J. Herzfeld & Co., Inc.,
Miami, FL 33116 a broker dealer, and
Age: 42 Thomas J. Herzfeld Advisors, Inc.
INDEPENDENT DIRECTORS:
ANN S. LIEFF Director 1998 to present President of the Lieff Company, a 1 Hastings
c/o The Herzfeld Caribbean management consulting firm that Entertainment, Inc.;
Basin Fund, Inc. offers business solutions, strategies Claire's Stores, Inc.;
PO Box 161465 and CEO mentoring to corporations Mayors Jewelers,
Miami, FL 33116 and women/family-owned businesses, Inc.
Age: 52 1998-present; former CEO Spec's
Music 1980-1998, a retailer of
recorded music.
MICHAEL A. RUBIN Director 2002 to present Partner of Michael A. Rubin P.A., 1 Margo Caribe, Inc.
c/o The Herzfeld Caribbean attorney at law; Broker, Oaks
Basin Fund, Inc. Management & Real Estate Corp., a
PO Box 161465 real estate corporation
Miami, FL 33116
Age: 62
ALBERT L. WEINTRAUB Director 1999 to present Senior Partner of Weintraub, 1 None
c/o The Herzfeld Caribbean Weintraub; of counsel Orshan
Basin Fund, Inc. et al, attornies; Chairman of
PO Box 161465 E-Lysium Transaction Systems,
Miami, FL 33116 Inc., an application service provider
Age: 74 of transaction processing, billing
and payment systems
* An "interested person" (as defined in the Investment Company Act of 1940) of
the Fund because he/she is an officer and employee of the Fund's investment
adviser.
OWNERSHIP OF FUND SECURITIES BY DIRECTORS
INTERESTED DIRECTOR
DOLLAR RANGE NUMBER OF PERCENT
NAME OF EQUITY IN THE FUND** SHARES HELD** OF CLASS**
----------------------------------------------------------------------------------------------------------------------
Thomas J. Herzfeld Over $100,000 56,400 3.36%
INDEPENDENT DIRECTORS
Ann S. Lieff $1 - $10,000 1,666 0.10%
Michael A. Rubin $1 - $10,000 1,000 0.06%
Albert L. Weintraub $1 - $10,000 500 0.03%
All directors and executive officers
as a group (five persons) N/A 59,566 3.55%
**as of July 31, 2004
The Board of Directors of the Fund held four regular meetings during the
Fund's fiscal year ended June 30, 2004. Each of the directors attended at least
75% of the aggregate number of meetings of the Board of Directors and of each
committee of which he or she was a member.
AUDIT COMMITTEE
The Audit Committee of the Board currently consists of Messrs. Weintraub
and Rubin, and Ms. Lieff, none of whom is an "interested person" of the Fund.
Each member of the Audit Committee is considered independent under the
applicable NASD listing standards. The Board of Directors has adopted a written
charter for the Audit Committee, a copy of which is attached hereto. The Audit
Committee reviews the scope of the audit by the Fund's independent auditors,
confers with the auditors with respect to the audit and the internal accounting
controls of the Fund and with respect to such other matters as may be important
to an evaluation of the audit and the financial statements of the Fund, and
makes recommendations with respect to the selection of auditors for the Fund.
AUDIT COMMITTEE REPORT
The Audit Committee met once during the fiscal year ended June 30, 2004,
and has reviewed and discussed the Fund's audited financial statements with Fund
management. Further, the Audit Committee has discussed with Kaufman, Rossin &
Co., P.A., the Fund's independent auditors, the matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee has received the written disclosures and a letter from
Kaufman, Rossin & Co., P.A. required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has discussed with
Kaufman, Rossin & Co., P.A. their independence. Based upon the foregoing, the
Audit Committee recommended to the Board of Directors that the audited financial
statements of the Fund be included in the Fund's annual report to stockholders
for filing with the U.S. Securities and Exchange Commission for the fiscal year
ended June 30, 2004.
Albert L. Weintraub
Ann S. Lieff
Michael A. Rubin
NOMINATING COMMITTEE
The Board has a Nominating Committee comprised solely of independent
directors which consists of Messrs. Weintraub and Rubin, and Ms. Lieff. The
Nominating Committee is responsible for reviewing and recommending qualified
candidates in the event that a directorship is vacated or created, and operates
under a written charter, a copy of which is attached hereto. The Nominating
Committee will not consider nominees recommended by stockholders. Each member of
the Nominating Committee is an independent director under the rules promulgated
by the National Association of Securities Dealers. The Nominating Committee
believes that candidates for director should have certain minimum
qualifications, including (i) the ability to apply good business judgment and
must be in a position to properly exercise their duties of loyalty and care;
(ii) proven leadership capabilities, high integrity and moral character,
significant business experience and a high level of responsibility within their
chosen fields; (iii) the ability to quickly grasp complex principles of
business, finance, international transactions and the regulatory environment in
which investment companies must operate; and (iv) the ability to read and
understand basic financial statements, however the committee retains the right
to modify these minimum qualifications from time to time. In general, candidates
will be preferred who hold an established senior or executive level position in
business, finance, law, education, research or government. The committee's
process for identifying and evaluating nominees is as follows: In the case of
incumbent directors whose terms of office are set to expire, the Nominating
Committee reviews such directors' overall service to the Fund during their term,
including the number of meetings attended, level of participation, quality of
performance, and any transactions of such directors with the Fund, if any,
during their term, and confirms their independence if applicable. In the case of
new director candidates, the committee first determines whether the nominee must
be independent for purposes of The Nasdaq Stock Market and whether the candidate
must be considered a disinterested director under the Investment Company Act. In
either case, determinations are based upon the Fund's charter and bylaws,
applicable securities laws, the rules and regulations of the SEC, the rules of
the National Association of Securities Dealers, and the advice of counsel, if
necessary. The committee then uses its network of contacts to compile a list of
potential candidates, but may also engage, if it deems appropriate, a
professional search firm. The committee then meets to discuss and consider such
candidates' qualifications and recommend the nominee. The Nominating Committee
held one meeting during the last fiscal year.
Stockholders and other interested parties may contact the Board or any
member of the Board by mail. To communicate with the Board or any member of the
Board correspondence should be addressed to the Secretary of the Fund, Attention
Board of Directors. All such correspondence should be sent c/o the Fund at P.O.
Box 161465, Miami, Florida, 33116.
The Fund pays those directors who are not "interested persons" of the Fund
$1,000 per year in addition to $400 for each meeting of the Board attended, plus
reimbursement for expenses. Such fees totaled $7,800 for the fiscal year ended
June 30, 2004.
The aggregate compensation paid by the Fund to each of its directors
serving during the fiscal year ended June 30, 2004, is set forth in the
compensation table below. Mr. Herzfeld receives no direct compensation for his
services on the Fund's Board.
TOTAL COMPENSATION
AGGREGATE PENSION OR RETIREMENT ESTIMATED FROM FUND AND FUND
NAME OF PERSON AND COMPENSATION BENEFITS ACCRUED ANNUAL BENEFITS COMPLEX PAID TO
POSITION WITH FUND FROM THE FUND AS PART OF FUND EXPENSES UPON RETIREMENT DIRECTORS
----------------------------------------------------------------------------------------------------------------------------
Thomas J. Herzfeld* $0 $0 $0 $0
President and Director
Ann S. Lieff $2,600 $0 $0 $2,600
Director
Albert L. Weintraub $2,600 $0 $0 $2,600
Director
Michael A. Rubin $2,600 $0 $0 $2,600
Director
*"Interested person" of the Fund as defined by Section 2(a)(19) of the
Investment Company Act of 1940.
The Fund does not have a formal policy regarding attendance by directors
at annual meetings of stockholders but encourages such attendance. All members
of the Board attended the Fund's 2003 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE FUND'S STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE SOLE NOMINEE FOR DIRECTOR.
ADDITIONAL INFORMATION
HERZFELD/CUBA (the "Adviser"), a division of Thomas J. Herzfeld Advisors,
Inc., with offices at The Herzfeld Building, P.O. Box 161465, Miami, Florida
33116, serves as the Fund's investment adviser pursuant to an Investment
Advisory Contract dated June 24, 1993. The Adviser also provides certain
administration services to the Fund, but the Fund has no formal administrative
contract. Mr. Herzfeld, a director of the Fund, is an executive of the Adviser.
Thomas J. Herzfeld & Co., Inc., P.O. Box 161465, Miami, Florida 33116,
acted as Underwriter to the Fund.
Kaufman, Rossin & Co., P.A., 2699 S. Bayshore Drive, Miami, FL 33133,
independent auditors, have been selected by the Board as the Fund's independent
auditors for the current fiscal year ending on June 30, 2005. A representative
of Kaufman, Rossin & Co., P.A. will be present at the meeting and will have the
opportunity to respond to appropriate questions from stockholders and to make
such statements as desired.
INDEPENDENT AUDITORS' FEES
The following table sets forth the aggregate fees paid to the independent
auditors for the two most recent fiscal years for professional services rendered
for: (i) the audit of the annual financial statements and the review of the
financial statements included in the Fund's report to stockholders; (ii)
assurance and related services; (iii) tax compliance, tax advice, and tax
planning; (iv) all other products and services provided to the Fund which
included matters related to regulatory issues and preparation of unaudited
financial statements.
Audit Fees Audit-Related Fees Tax Fees All Fiscal Year-End
Other Fees
---------------------------------------------------------------------------------------------------
$20,500 $0 $3,500 $4,682 6/30/04
$15,500 $0 $3,500 $4,512 6/30/03
The Fund's Audit Committee charter requires that the Audit Committee shall
pre-approve all auditing services and permitted non-audit services (including
the fees for such services and terms thereof) to be performed for the Fund by
its independent public accountants in one of two methods. Under the first
method, the engagement to render the services would be entered into pursuant to
pre-approval policies and procedures established by the Audit Committee,
provided (i) the policies and procedures are detailed as to the services to be
performed, (ii) the Audit Committee is informed of each service, and (iii) such
policies and procedures do not include delegation of the Audit Committee's
responsibilities under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") to the Trust's management. Under the second method, the
engagement to render the services would be presented to and pre-approved by the
Audit Committee (subject to the de minimus exceptions for non-audit services
described in Section 10A(i)(1)(B) of the Exchange Act that are approved by the
Audit Committee prior to the completion of the audit). At the present time, the
Audit Committee has not adopted pre-approval policies and procedures, and would
use the second method for pre-approval provided for in its charter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of August 20, 2004, there were no persons known by the Fund to own
beneficially more than 5% of the outstanding shares of the Fund.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's
directors, executive officers and certain other persons (collectively,
"Reporting Persons"), to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
equity securities of the Fund. Reporting Persons are required by SEC regulations
to furnish the Fund with copies of all Section 16(a) forms they file.
To the Fund's knowledge, based solely on review of the copies of such
reports furnished to the Fund during the fiscal year ended June 30, 2004, all
Section 16(a) filing requirements applicable to the Reporting Persons were
complied with.
STOCKHOLDER PROPOSALS
Proposals intended to be presented by stockholders for consideration at
the 2005 Annual Meeting of Stockholders must be received by the Secretary of the
Fund no later than May 3, 2005, in order to be included in the proxy statement
for the meeting. A stockholder who wishes to make a proposal at the 2005 Annual
Meeting of stockholders without including the proposal in the Fund's proxy
statement must notify the Fund, and the Fund's officers, of such proposal no
earlier than August 20, 2005 (90 days prior), and no later than September 19,
2005 (60 days prior, assuming a November 18, 2005 meeting.) If a stockholder
fails to give notice by the later date, then the persons named as proxies in the
proxies solicited by the Board for the 2005 Annual Meeting of Stockholders may
exercise discretionary voting power with respect to any such proposal.
To submit a proposal, a stockholder must own 1% or $2,000 worth of shares
of the Fund for at least one year and must own those shares through the date of
the 2005 Annual Meeting. Stockholders who qualify may submit only one proposal
per Annual Meeting, and the proposal may be no longer than 500 words.
REPORTS TO STOCKHOLDERS AND FINANCIAL STATEMENTS
The Annual Report to Stockholders of the Fund, including audited financial
statements of the Fund for the fiscal year ended June 30, 2004, is being mailed
to stockholders. The Annual Report should be read in conjunction with this Proxy
Statement but is not part of the proxy soliciting material. A copy of the Annual
Report may be obtained from the Fund, without charge, by contacting the Fund in
writing at the address on the cover of this Proxy Statement, or by calling
800-854-3863 or 305-271-1900.
OPEN MATTERS
Management of the Fund does not know of any matters to be presented at the
Annual Meeting other than those mentioned in this Proxy Statement. If any other
business should come before the meeting, the proxies will vote thereon in
accordance with their best judgment.
By Order of the Directors,
Cecilia Gondor
Treasurer & Secretary
The Herzfeld Caribbean Basin Fund, Inc.
DATED: August 31, 2004
IF YOU CANNOT ATTEND THE ANNUAL MEETING, IT IS REQUESTED THAT YOU COMPLETE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED SO THAT THE
MEETING MAY BE HELD AND ACTION TAKEN ON THE MATTERS DESCRIBED HEREIN WITH THE
GREATEST POSSIBLE NUMBER OF SHARES PARTICIPATING.
EXHIBIT A
THE HERZFELD CARIBBEAN BASIN FUND, INC.
AUDIT COMMITTEE CHARTER
ARTICLE I
PURPOSE
The purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors of The Herzfeld Caribbean Basin Fund, Inc. (the "Fund") in
undertaking and fulfilling its oversight responsibilities in connection with:
(a) reviewing the financial reports and other financial information
prepared by the Fund for submission to any governmental or regulatory body or
the public and monitoring the integrity of such financial reports;
(b) reviewing the Fund's systems of internal controls established for
finance, accounting, legal compliance and ethics;
(c) reviewing the Fund's accounting and financial reporting processes
generally and the audits of the financial statements of the Fund;
(d) monitoring compliance with legal regulatory requirements;
(e) monitoring the independence and performance of the Fund's independent
public accountants; and
(f) providing effective communication between the Board, senior and
financial management and the Fund's independent public accountants.
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full power and all necessary resources to
retain special legal, accounting or other consultants to advise the Committee.
ARTICLE II
MEMBERSHIP AND TERM
2.1. Membership. The Committee shall consist of at least three members of
the Fund's Board of Directors. Committee members shall meet the independence
requirements of the Nasdaq Stock Market, Section 10A(m)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the
Securities and Exchange Commission ("Commission"). Accordingly,
(a) The Committee shall be composed entirely of Directors who are not
"interested persons" (as defined in the Investment Company Act of 1940) of the
Fund;
(b) Each member of the Committee must be an independent, non-executive
Director free from any relationship that, in the judgment of the Board, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director;
(c) Each member of the Committee must not accept directly or indirectly
any consulting, advisory, or other compensatory fee from the Fund or any
subsidiary thereof other than in such member's capacity as a Director;
(d) Each member of the Committee must be financially literate(1) at the
time of appointment to the Committee; and
(e) At least one member of the Committee must have past employment
experience in finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background which results in
such individual's financial sophistication, including being or having been a
chief executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.
2.2. Term. Each member of the Committee shall serve until his resignation
or he is otherwise removed. Any vacancy occurring in the Committee shall be
filled by the remaining Committee members. The members of the Committee will
elect a Chairman by formal vote of the Committee's full membership.
ARTICLE III
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Fund's independent public accountants shall be accountable to the
Committee. The Committee will ascertain that the independent public accountants
will be available to the full Board at least annually (and more frequently if
deemed appropriate by the Committee) to provide the Board with a timely analysis
of significant financial reporting issues. The Committee will not engage the
independent public accountants to perform any services set forth in Section
10(A)(g) of the Exchange Act.
ARTICLE IV
MEETINGS
The Committee shall meet on a regular basis and is empowered to hold
special meetings, as circumstances require, all in accordance with the Fund's
charter and bylaws.
a. The Committee shall meet at least annually with management of the Fund
and with the Fund's independent public accountants to discuss any issues arising
from the Committee's oversight obligations.
b. The Committee shall meet at least annually with the independent public
accountants (outside the presence of management) to discuss any issues arising
from the Committee's oversight obligations.
c. The Committee shall meet at least annually with management (outside the
presence of the independent public accountants) to discuss management's
evaluation of the work performed by the independent public accountants and the
appropriateness of their fees.
d. The Committee shall keep minutes of each meeting and those minutes
shall be reported to the Board of Directors.
----------------------
(1) The term "financial literacy" means that a member of the Committee must have
the ability to read and understand fundamental financial statements, including a
balance sheet, income statement and cash flow statement. The term "financial
literacy" does not mean that a member must have a chief financial officer's or
accounting practitioner's understanding of generally accepted accounting
principals, consistently applied, as adopted in the United State of America by
the Financial Accounting Standards Board ("GAAP").
ARTICLE V
RESPONSIBILITIES
The following functions are the common recurring activities of the
Committee in carrying out its oversight role. These functions are set forth as a
guide with the understanding that the Committee may diverge from this guide as
appropriate given the circumstances.
(a) Review and reassess the adequacy of the Committee and this Charter not
less than annually and recommend any proposed changes to the Board for
consideration and approval.
(b) Review with management and the independent public accountants the
audited financial statements and related footnotes, and the clarity of the
disclosures in the financial statements, to be included in the Fund's Annual
Report on Form N-CSR and N-SAR, prior to the filing of such forms, and its
Annual Report to Shareholders, including a review of major issues regarding
accounting and auditing principles and practices and any related party
transactions as well as the adequacy of internal controls that could
significantly affect the Fund's financial statements, and review and consider
with the independent public accountants the matters required to be discussed by
Statement on Auditing Standards ("SAS") 61.
(c) Review with management and the independent public accountants their
judgments about the quality, not just the acceptability, of accounting
principles, the reasonableness of significant judgments, and the clarity and
transparency of the disclosures in the financial statements.
(d) Prepare the report required by the rules of the Securities and
Exchange Commission regarding the Committee to be included in the Fund's annual
proxy statement. The Committee will include a statement within such report on
whether the Committee has recommended that the financial statements be included
in the Fund's annual Report to Shareholders, and the Fund's Annual Report on
Forms N-CSR and N-SAR. The Committee should also ensure that a copy of this
Charter is included within the Fund's proxy statement at least once every three
years.
(e) Discuss with management and the independent public accountants the
effect of regulatory and accounting initiatives, including pronouncements by the
Financial Accounting Standards Board, the Securities and Exchange Commission and
other agencies or bodies, on the Fund's financial statements.
(f) Review disclosures made to the Committee by the Fund's President and
Chief Executive Officer and Chief Financial Officer, or the Fund's disclosure
committee or any member thereof, during their certification process for Form
N-CSR, about any significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving management or
other employees who have a significant role in the Fund's internal controls.
(g) Review any relevant financial reports or other financial information
submitted to any governmental body, or the public, including any certification,
report, opinion, or review rendered by the independent public accountants.
(h) Obtain from the independent public accountants their recommendation
regarding internal controls and other matters relating to the accounting
procedures and the books and records of the Fund and the correction of controls
deemed to be deficient. After the completion of the audit, the Committee shall
review with the independent public accountants any problems or difficulties the
independent public accountants may have encountered.
(i) Receive periodic reports from the independent public accountants
regarding relationships between the independent public accountants and the Fund
consistent with Independence Standards Board Standard Number 1. The Committee
shall also discuss with the independent public accountants any such disclosed
relationships and their impact on the independent public accountants'
independence. The Committee shall take appropriate action to ensure the
continuing objectivity and independence of the independent public accountants.
(j) The Committee shall have the sole authority to appoint or replace the
independent public accountants (subject, if applicable, to stockholder
ratification).
(k) The Committee shall be directly responsible for the compensation and
oversight of the work of the independent public accountants (including
resolution of disagreements between management and the independent public
accountant regarding financial reporting) for the purpose of preparing or
issuing an audit report or related work. The independent public accountants
shall report directly to the Committee.
(l) The Committee shall pre-approve all auditing services and permitted
non-audit services (including the fees for such services and terms thereof) to
be performed for the Fund by its independent public accountants in one of two
methods. Under the first method, the engagement to render the services would be
entered into pursuant to pre-approval policies and procedures established by the
Committee, provided (i) the policies and procedures are detailed as to the
services to be performed, (ii) the Committee is informed of each service, and
(iii) such policies and procedures do not include delegation of the Committee's
responsibilities under the Exchange Act to the Fund's management. Under the
second method, the engagement to render the services would be presented to and
pre-approved by the Committee (subject to the de minimus exceptions for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act that
are approved by the Committee prior to the completion of the audit). The
Chairman of the Committee will have the authority to grant pre-approvals of
audit and permissible non-audit services by the independent public accountants,
provided that all pre-approvals by the Chairman must be presented to the full
Committee at its next scheduled meeting. The Fund will provide for appropriate
funding as determined by the Committee, for payment of compensation to the
independent public accountants and to any consultants, experts or advisors
engaged by the Committee and for ordinary administrative expenses of the
Committee that are necessary or appropriate in carrying out its duties.
(m) Adopt procedures for the receipt, retention and treatment of
complaints received by the Fund regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees, as well as employees of any investment adviser, administrator,
principal underwriter or any other provider of accounting related services of or
to the Fund, of concerns regarding questionable accounting or auditing matters.
(n) Ensure the rotation of the lead (or coordinating) audit partner having
primary responsibility for the audit and the audit partner responsible for
reviewing the audit as required by law.
(o) Recommend to the Board policies for the Fund's hiring of employees or
former employees of the independent public accountants who participated in any
capacity in the audit of the Fund.
(p) Review with the Fund's counsel legal matters that may have a material
impact on the financial statements, the Fund's compliance policies and any
material reports or inquiries received from regulators or governmental agencies.
(q) Conduct or authorize investigation into any matters within the
Committee's scope of responsibilities with full access to all books, records,
facilities and personnel of the Fund and direct access to the independent public
accountants. The Committee has the ability to retain, at the Committee's
request, special legal, accounting or other consultants, experts or advisors it
deems necessary in the performance of its duties.
(r) Consider such other matters in relation to the financial affairs of
the Fund and its accounts, and in relation to the audit of the Fund, as the
Committee may, in its discretion, determine to be advisable. While the Committee
has the responsibilities and powers set forth in this Charter, it is not the
duty of the Committee to plan or conduct audits or to determine that the Fund's
financial statements are complete and accurate and are in accordance with the
generally accepted accounting principles. This is the responsibility of
management and the independent public accountants.
The Committee recognizes that the Fund's management is responsible for
preparing the Fund's financial statements, and the independent public
accountants are responsible for auditing or reviewing those financial statements
in compliance with applicable law. The Committee also recognizes that management
of the Fund and the independent public accountants have more time, knowledge and
more detailed information on the Fund than do Committee members. Consequently,
in carrying out its oversight responsibility, the Committee will not provide any
special assurances as to the Fund's financial statements or any professional
certification as to the independent public accountants' work. In addition, it is
not the duty of the Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent public
accountants, or to assure compliance with laws and regulations.
The date of the adoption of this charter by the Audit Committee was February 5,
2004.
The date of the adoption of this charter by the Board of Directors of the Fund
was February 5, 2004.
EXHIBIT B
THE HERZFELD CARIBBEAN BASIN FUND, INC.
NOMINATING COMMITTEE CHARTER
I. BASIC FUNCTION AND PURPOSE
The role of the Nominating Committee is to:
o recommend, for the Board's selection, nominees for director;
o identify qualified individuals to become Board members; and
o assist the Board in determining the structure, composition and size
of the Board and its committees.
II. ORGANIZATION
A. Membership
The Nominating Committee (the "Committee") of the Board of Directors (the
"Board") of The Herzfeld Caribbean Basin Fund, Inc. (the "Fund") shall consist
of at least two directors who are "independent directors", as such term is
defined in the rules and regulations adopted by the Nasdaq Stock Market
("Nasdaq") and each of whom is not an "interested person" as such term is
defined in the Investment Company Act of 1940.
Membership on the Committee shall be determined annually by the Board upon
the recommendation of the Committee. Unless a Chairman of the Committee is
elected by the full Board, the members of the Committee shall designate a
Chairman of the Committee by majority vote of the full Committee membership. A
Secretary of the Committee shall be selected by the Chairman of the Committee.
Should any member of the Committee cease to be independent, such member shall
immediately resign his or her membership on the Committee. The Board of
Directors may remove a member of the Committee in its discretion. The remaining
member(s) of the Committee shall have the power to fill any vacancy for the
remainder of the term.
B. Meetings
The Committee shall meet at least once each year. Additional meetings may
be scheduled as needed and may be called by the Chairman of the Committee. A
majority of the members of the Committee shall constitute a quorum for the
transaction of business. Minutes shall be recorded by the Secretary of the
Committee. Approval by a majority of the members present at a meeting at which a
quorum is present shall constitute approval by the Committee. The Committee may
also act by unanimous written consent without a meeting.
III. RESPONSIBILITIES
The Committee, in consultation with the Chairman of the Board and the President,
shall:
o review and make recommendations on the range of skills and expertise
which should be represented on the Board, and the eligibility
criteria for individual Board and committee membership, which shall
be in accordance with the rules and regulations of any governmental
or regulatory body exercising authority over the Fund, including,
without limitation, the Securities and Exchange Commission and
Nasdaq;
o review and recommend to the Board the appropriate structure of the
Board;
o lead the Board in its annual review of the Board's performance;
o identify and recommend potential candidates for election or
re-election to the Board;
o have authority to retain and terminate search firm to be used to
identify director candidates, including sole authority to approve
the search firms, fees and other retention terms;
o have authority to delegate any of its responsibilities to
subcommittees or individuals as the Committee deems appropriate;
o have authority to obtain advice and assistance from internal and
external legal, accounting or other advisers;
o review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval;
o annually evaluate its own performance; and
o perform such other functions as the Board may request from time to
time.
IV. REPORTING RESPONSIBILITY
Any action taken by the Committee shall be reported to the Board at the
next Board meeting following such action.
In addition, nomination matters may be discussed in executive session with
the full Board during the course of the year.
The date of the adoption of this charter by the Nominating Committee was
February 5, 2004
The date of the adoption of this charter by the Board of Directors of the Fund
was February 5, 2004.
APPENDIX A
February 2004
STATEMENT OF POLICY ON CRITERIA FOR SELECTING DIRECTORS AND NOMINATIONS PROCESS
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The Nominating Committee (the "Committee") has adopted this policy
statement in connection with requirements under applicable Nasdaq rules and for
purposes of required disclosure under the federal securities laws.
The Committee believes that all candidates for nomination as a director
should meet the following minimum criteria:
o Candidates must possess the ability to apply good business judgment
and must be in a position to properly exercise their duties of
loyalty and care.
o Candidates should exhibit proven leadership capabilities, high
integrity and moral character, significant business experience and a
high level of responsibility within their chosen fields.
o Candidates should have the ability to quickly grasp complex
principles of business, finance, international transactions and the
regulatory environment in which investment companies must operate.
o Candidates should have the ability to read and understand basic
financial statements.
o In general, candidates will be preferred who hold an established
senior or executive level position in business, finance, law,
education, research or government.
The Committee intends to follow the process outlined below in selecting
director candidates for nomination by the Board:
o In the case of incumbent directors whose terms of office are set to
expire, the Committee will review such directors' overall service to
the Fund during their term, including the number of meetings
attended, level of participation, quality of performance, and any
transactions of such directors with the Fund during their term.
- On the basis of information learned during this process, the
Committee will determine which nominee(s) to recommend to the
Board to submit for election at the next annual meeting.
o In the case of new director candidates, the committee will first
determine whether the nominee must be independent for Nasdaq
purposes and/or whether the candidate must not be considered an
"interested person" under the Investment Company Act, which
determination will be based upon the Fund's charter and bylaws,
applicable securities laws, the rules and regulations of the SEC,
the rules of the National Association of Securities Dealers, and the
advice of counsel, if necessary.
- The Committee will then use its and management's network of
contacts to compile a list of potential candidates, but may
also engage, if it deems appropriate, a professional search
firm.
- The Committee will then conduct a process of making a
preliminary assessment of each candidate based upon the resume
and biographical information, an indication of the
individual's willingness to serve and other background
information.
- This information will be evaluated against the criteria set
forth above and the specific needs of the Fund at that time.
Based upon a preliminary assessment of the candidate(s), those
who appear best suited to meet the needs of the Fund may be
invited to participate in a series of interviews, which are
used as a further means of evaluating potential candidates.
- On the basis of information learned during this process, the
Committee will determine which nominee(s) to recommend to the
Board to submit for election at the next annual meeting.
THE HERZFELD
CARIBBEAN BASIN FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
OF THE HERZFELD CARIBBEAN BASIN FUND, INC.
The undersigned hereby appoints Cecilia Gondor, as attorney, with full powers of
substitution, and revocation, to attend the Annual Meeting of Stockholders of
The Herzfeld Caribbean Basin Fund, Inc. on November 18, 2004 and any
adjournments thereof and thereat to vote all shares which the undersigned would
be entitled to vote if personally present, upon the following matters, as set
forth in the Notice of Annual Meeting of Stockholders, and upon such other
business as may properly come before the meeting or any adjournment thereof.
If said attorney or any substitutes shall be present and vote at said meeting or
any adjournment thereof, a majority of them so present and voting (or if only
one be present and voting, then that one) shall have and exercise all the powers
hereby granted. The undersigned revokes any proxy or proxies heretofore given to
vote such shares at said meeting or any adjournment thereof.
| Date _________________ , 2004
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Sign here exactly as name(s) appear on the left. (SIGN IN THE BOX)
| | CJH600
V V
| PLEASE FILL IN ONE OF THE BOXES AS SHOWN USING |
V BLACK OR BLUE INK OR NUMBER 2 PENCIL. |X| V
PLEASE DO NOT USE FINE POINT PENS.
ALL PROXIES WILL BE VOTED, AND WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
NOTED HEREON.
IF INSTRUCTIONS ARE NOT GIVEN, THIS PROXY WILL BE TREATED AS GRANTING AUTHORITY
TO VOTE IN FAVOR OF THE ELECTION OF THE NOMINATED DIRECTOR.
FOR WITHHELD
NOMINEE FROM
NOMINEE
1. ELECTION OF DIRECTOR |_| |_|
Ann S. Lieff
2. IN HER DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS CARD.
| CJH600 |
V V