Corporate Governance
The Corporate Governane Code
The Board is committed to maintaining high standards of corporate governance. Whilst companies that have securities traded on the Alternative Investment Market (AIM) are not required to comply with the requirements of the UK corporate Governance Code, the Board has sought to robustly apply the principles of the Code as far as practicable given the size of the Company and the nature of its operations.
The Board of Directors
The Company is controlled by the Board of Directors which currently comprises four Executive and three non-executive Directors. The Board of Directors has overall responsibility for the Group. Its aim is to represent the interests of the Group’s shareholders and to provide leadership and control in order to ensure the growth and development of a successful business. Due to the current size of the Group, it is the Board’s view that the existing arrangement, whereby the Company has an Executive Chairman, is in the best interests of the Group.
Mr James Noble acts as the Company's Deputy Chairman and senior independent non-executive.
All Directors are able to take independent advice in furtherance of their duties if necessary.
The Board is responsible to shareholders for the proper management of the Group, and Board meetings are held at least six times a year to set the overall direction and strategy of the Group, to review financial and operating performance and to advise on senior management appointments. Financial policy and budgets, including capital expenditure, are approved and monitored by the Board. All key strategic decisions are subject to Board approval. The Company Secretary is responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.
Directors are subject to election by shareholders at the first opportunity after their appointment. In addition, one third of the Directors are subject to retirement by rotation at each Annual General Meeting.
The Board expects to hold six full meetings each year.
Committees of the Board
There are three committees of the Board, details of which can be found by clicking on the links below:
Communication with Shareholders
The Board attaches great importance to effective communication with shareholders and encourages dialogue with both its institutional and private investors and responds promptly to all questions received verbally or in writing. Regular communication is maintained with all shareholders through Company announcements, the Annual Report and Accounts, Preliminary Results and the Interim Report. Directors regularly attend meetings with analysts and institutional shareholders throughout the year. With private shareholders this is not always practical. The Board has therefore sought to use the Company’s Annual General Meeting as the opportunity to meet private shareholders, after which the Board gives a presentation on the activities of the Group and there is also an opportunity to ask questions of Directors on a formal and informal basis. All shareholders have at least 21 days’ notice of the Annual General Meeting.
In addition the Company operates this website as an important investor communications tool. This website contains further details of the Group and its activities, details of regulatory announcements and Company announcements, Annual and Interim Reports, and details of the Company’s share price, share trading activity and graphs.
Maintenance of a Sound System of Internal Control
The Directors have overall responsibility for ensuring that the Group maintains a system of internal control to provide them with reasonable assurance that the assets of the Group are safeguarded and that the shareholders’ investments are protected. The system includes internal controls covering financial, operational and compliance areas, and risk management. There are limitations in any system of internal control, which can provide reasonable but not absolute assurance with respect to the preparation of financial information, the safeguarding of assets and the possibility of material misstatement or loss.
The Board has considered and reviewed the system of internal controls in place in accordance with the Turnbull Report. An assessment of the major risk areas for the business and methods used to monitor and control them was also undertaken. In addition to financial risk, the review covered operational, commercial, environmental, regulatory and research and development risks. The risk review is an ongoing process with regular review by the Board at least annually.
The key procedures designed to provide an effective system of internal control that have operated throughout the year and up to the date of the sign-off of this report are described below.
Control Environment
There is an organisational structure with clearly defined lines of responsibility and delegation of accountability and authority.
Risk Management
The Group employs Directors and senior executives with the appropriate knowledge and experience for a pharmaceutical group such as GW Pharmaceuticals plc. A formal risk management review is performed annually as part of the process of determining the Group’s system of internal controls and risk mitigation procedures.
Financial Information
The Group prepares detailed budgets and working capital projections, which are approved annually by the Board and are updated regularly throughout the year. Detailed management accounts and working capital cash flows are prepared on a monthly basis and compared to budgets and projections to identify any significant variances.
Management of Liquid Resources
The Board is risk averse when investing the Group’s surplus cash funds. The Group’s treasury management policy sets out strict procedures and limits on how surplus funds are invested.