The Audit Committee, which will also encompass the monitoring of risks posed to the Group on an ongoing basis, will have responsibility for, among other things, the monitoring of the financial integrity of the Company’s financial statements and the involvement of its auditors in that process. It will focus in particular on compliance with accounting policies and ensuring that an effective system of internal financial controls is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and half-yearly reports remains with the Board. 

The Audit Committee will meet no less than twice a year at the appropriate times in the reporting and audit cycle. It will also meet on an ‘as necessary’ basis. The responsibilities of the committee covered in its terms of reference include external audit, internal audit, financial reporting and internal controls.

The Remuneration Committee will have responsibility, subject to any necessary Shareholder approval, for the determination of the terms and conditions of employment, remuneration and benefits of each of the Executive Directors and certain other senior executives, including pension rights and any compensation payments. It will also recommend and monitor the level and structure of remuneration for senior management and the implementation of share option or other performance-related schemes. 

The Remuneration Committee will meet at least twice a year. The responsibilities of the committee covered in its terms of reference include determining and monitoring policy on and setting levels of remuneration, termination, performance-related pay, pension arrangements, reporting and disclosure, share incentive plans and the appointment of remuneration consultants.

Adopted by the Board of the Group on: 23 April 2021 

The OCT Group consists of Oxford Cannabinoid Technologies Holdings Plc and its subsidiary,  Oxford Cannabinoid Technologies Ltd. 

The OCT Group is committed to high standards of corporate governance and places good  governance at the heart of the business. In April 2021, the Board formally adopted the Quoted  Companies Alliance’s (“QCA”) code of corporate governance (“the Code”). The Board believes  that the QCA Code provides the OCT Group with a rigorous corporate governance framework  to support the business and its success in the long term. The Code sets out 10 corporate  governance principles. The ways in which the OCT Group meets these principles are described  in the following sections and incorporates information about the ways in which the Board  discharges its duties under the Companies Act 2006, s172. 

1. Establish a strategy and business model which promote long-term value for shareholders 

The OCT Group is focussed on drug development to tackle the problem of the global pain  pandemic. Pain is a pandemic comprising a multitude of conditions that dramatically impairs  quality of life. It is estimated that there are 1.5 billion chronic pain sufferers worldwide, more  than cancer, heart disease and diabetes combined. In the US alone, the number of individuals  suffering from chronic pain is close to 100 million. Patients’ associations are calling for novel  therapeutic approaches and are joined by the regulatory agencies who support efforts to  address severe pain disorders classified as orphan diseases. The OCT Group is dedicated to  helping address the global pain pandemic, leading to a happier and healthier future for  patients, their families, and the wider community at large. 

In establishing the OCT Group’s strategy, the Board considered the long-term interests of our  stakeholders and set a course which aligns those interests with those of the OCT Group,  promoting the long-term interests of the OCT Group and long-term value for shareholders. 

The OCT Group is well positioned to deliver long-term value for shareholders through the  implementation of its strategy, focusing on four key areas: 

• Inputs – diversified inputs to create upside and reduce downside risk
• Screening – world leading academic and commercial partners 
• Development – pre clinical testing and randomised controlled clinical trials
• Monetisation – multiple opportunities for value creation supplement primary route of drug approval and commercialisation

2. Seek to understand and meet shareholder needs and expectations 

The OCT Group is proud to have a diverse shareholder base, including a significant proportion  of private shareholders and other long-term institutional investors. The Board seeks to  understand the needs and expectations of its stakeholders, particularly shareholders, from  investor roadshows and direct contact with shareholders as and when requested. The Board  responds to the insight gained through these consultations by adjusting the strategy where  necessary. The OCT Group provides shareholders and other stakeholders with relevant  information in a timely and balanced manner and meets with its largest shareholders  periodically to understand their views on our performance and future plans. We actively  encourage shareholders to participate in our AGM as an opportunity for all shareholders to  share their views openly with the whole Board and other shareholders. Please see principle  10 for more details about the AGM and shareholder engagement. 

3. Consider wider stakeholder and social responsibilities and their implications for  long-term success 

The Board recognises its primary legal responsibility to promote the success of the OCT Group for the benefit of its members as a whole, taking into account the interests of other  stakeholders including customers, employees, partners, suppliers, regulators, the  environment and the local communities in which the OCT Group operates. Interpreting this  responsibility, and in line with recommendations published by the GC 100, the Board  considers that its duty is not to balance the interests of the OCT Group and those of other  stakeholders identified but instead to determine, after weighing up the relevant factors, the  course of action it considers best leads to the long-term success of the OCT Group. 

The OCT Group is a ‘values-led’ business. Establishing the right culture is an integral part of  delivering our strategy, in which employees are key internal stakeholders helping to grow the  business and instrumental in developing its culture. More information on this is outlined in  principle 8. 

4. Embed effective risk management, considering both opportunities and threats,  throughout the organisation 

The OCT Group recognises that effective enterprise risk management is critical to enable it to  meet its strategic objectives. 

We have a clear framework for identifying and managing risk, both at an operational and  strategic level. Our risk identification and mitigation processes have been designed to be  responsive to the changing environment in which we operate. The impact of emerging risks  on the OCT Group’s business model are also considered and used to make informed decisions, including as to the delivery and evolution of our strategy. 

Key Risks faced by the OCT Group are described in our Annual Reports. While the risks are  typical of the risks faced by other pharmaceutical businesses, e.g. failure of clinical trials and  intellectual property risks, we believe the OCT Group is well positioned to mitigate these 

through a combination of our risk management processes, our control activity and the  strategic direction we are pursuing. 

5. Maintain the Board as a well-functioning, balanced team led by the Chair 

The Board currently comprises four Executive and four Non-Executive Directors. The roles and  responsibilities of the Executive Chairman, Non-Executive Directors, Executive Directors and  the Company Secretary are clearly defined and regularly reviewed.  

The Board meets at least four times a year. For Board meetings, the management team  submit reports for consideration and the Board has a formal schedule of matters reserved to  it which you can find on our website. The Board have direct access to external advisers and  are able to take independent advice in the furtherance of duties if necessary. 

The Remuneration Committee discusses members’ time commitments from Directors,  particularly Non-Executive Directors.  

Other information: 

• The roles of Chairman and Chief Executive have always been split.
• The Executive Directors are accountable to the Board for the operating and financial  performance of the OCT Group. 
• The Board is also responsible for approving the appointment of Executives, setting  Executive remuneration and devising incentive programmes, agreeing financial and  accounting policies and ensuring that the shareholders are properly informed about  the state of the businesses. In addition, the Board is responsible for the appointment  and removal of the Company Secretary. 
• At the date of this document, the Board comprised the Executive Chairman, Chief  Executive Officer, Chief Operating Officer, Finance Director and four Non-Executive  Directors, two of whom the Board considers to be independent. 
• The Board is satisfied that it currently has a sufficient range of relevant operational  and financial experience to be able to discharge its responsibilities. 
• The Board has constituted two Committees: Audit and Remuneration. Both  Committees comprise only independent Non-Executive Directors. 
• The Board and the Executive team is working together to evolve the flow of monthly  information to the Board with the aim of simpler, insight-focussed reporting to  facilitate effective debate and enable robust and timely decision-making. 

6. Ensure that between them the Directors have the necessary up-to-date experience,  skills and capabilities 

The Board is satisfied that it has an appropriate balance of skills and experience as well as an  appropriate balance of personal qualities and capabilities to deliver the OCT Group’s long-

term strategic objectives. The Board is committed to maintaining balanced representation of  both women and men across the organisation, including at Board level and within the  Executive team. The Board is currently comprised of four women and four men. The Executive  team is currently comprised of two women and three men. 

The Board regularly reviews its composition and that of its Committees to ensure it has access  to diverse perspectives and the necessary up-to-date experience, skills and capabilities to  discharge its duties effectively. The Board also reviews the length of time each Director has  served on the Board and assesses if contributions made by each Director remain effective.  

Changes will be made to the composition of the Board and its Committees to ensure the right  balance of complementary skills and capabilities for the next phase of the OCT Group’s strategic direction. The Remuneration Committee also works to ensure the right balance of  skills, knowledge and capabilities on the Board Further information about the Board, including  biographies describing each Director’s experience can be found on our website. 

The OCT Group encourages each Director to identify their individual training needs to support  the effective operation of the Board and the delivery of the OCT Group’s strategy. The Board  have also received briefings on corporate governance, directors’ duties, the listing rules and  other capital markets matters. 

Procedures are in place to enable individual Directors to seek independent advice at the  expense of the OCT Group and appropriate cover is in place. The Board and its Committees  may take external advice as appropriate. 

7. Evaluate board performance based on clear and relevant objectives, seeking  continuous improvement 

The Board will conduct an annual evaluation process to assess its effectiveness, as well as that  of its Committees and the individual Directors, to drive continuous improvement. The first  such review will be conducted in 2022. 

8. Promote a corporate culture that is based on ethical values and behaviours 

The Board recognises the importance of its role in promoting and monitoring the OCT Group’s  desired culture and ensuring it is consistent with the OCT Group’s long-term strategic  objectives. 

The OCT Group’s core values – excellence, collaboration, respect, fairness and integrity – underpin the delivery of our purpose to improve lives through the power of cannabinoids. 

We operate on the principle that a workplace where people’s differences are valued creates  a more productive, innovative and effective organisation. We also recognise that attracting,  retaining and incentivising key talent is integral to our ability to meet our strategic objectives.  The OCT Group’s employment policies follow best practice based on equal opportunities for  all employees, irrespective of race, gender, gender expression, nationality, sexual orientation,  disability, marital status, religion or age.

All decisions relating to employment are objective, free from bias and based upon work  criteria and individual merit. Consultation with employees or their representatives happens  throughout the OCT Group, with the aim of ensuring that views are taken into account when  decisions are made that are likely to affect their interests and that all employees are aware  of the financial and economic performance of the business. 

9. Maintain governance structures and processes that are fit for purpose and support  good decision-making by the Board 

The OCT Group’s governance structures support its corporate culture and are appropriate to  its stage of development and the complexity of the business. The Board has established a  Remuneration Committee and an Audit Committee to support effective governance and  decision-making. The Audit Committee will also encompass the monitoring of risks posed to  the Group on an ongoing basis. 

The key areas for focus for the Committees are listed below. The Board continuously monitors  the effectiveness of its governance structures, enabling them to evolve over time to support  the OCT Group’s growth and development. 

Remuneration Committee – board composition, succession planning, board nominations,  remuneration policy, incentive design/target setting, executive remuneration review 

Audit Committee – financial reporting, internal control and risk assessment, external auditor,  internal audit and review of third party providers 

10. Communicate how the Company is governed and is performing by maintaining a  dialogue with shareholders and other relevant stakeholders 

The OCT Group welcomes dialogue with shareholders, particularly the need for open  communication on the OCT Group’s strategy and takes care to calibrate perspectives  expressed by individual members in the context of its members as a whole. 

Principal communications with shareholders are conducted through the Annual and Interim  results, AGM and interim RNS announcements on key business developments. The OCT Group intends to supplement its Annual and Interim results with presentations to analysts and other  interested stakeholders (all to be made available on its website) and meets with larger  shareholders at least twice annually to discuss both performance and governance, as well as  our future plans as well as one to one meetings.  

The Board actively encourages shareholder participation at its Annual General Meeting and  other general meetings from time to time. The Board also recognises the importance of  ensuring that the OCT Group maintains effective engagement with other stakeholders and  taking into account the interests of internal and external stakeholders when making decisions  at Board level. Examples of ways in which the OCT Group engages with other stakeholders  include:

• Forging strong links with Patient Advocacy OCT Groups 
• Encouraging a feedback culture so that our people feel able to share views and insights in real time 
• Working closely with commercial and academic partners and suppliers to support the  development and maintenance of strategic relationships 
• Maintaining a constructive dialogue with policymakers on matters relevant to our  strategy and current operations 

Last updated: 14 May 2021