The Edinburgh Investment Trust Plc Annual Financial Report 2022 - Flipbook - Page 40
38 / GOVERNANCE / THE EDINBURGH INVESTMENT TRUST PLC
Directors’ Report / continued
DIRECTORS
INTERNAL CONTROLS AND RISK MANAGEMENT
Directors’ Interests in Shares
The AIC Code requires the Board to oversee the effectiveness of
the Company’s system of internal controls. The Board assumes
its ultimate responsibility for the Company’s system of internal
controls and for monitoring its effectiveness. The system of
internal controls is designed to manage rather than eliminate the
risk of failure to achieve business objectives. It can provide only
reasonable assurance against material misstatement or loss. The
Board has undertaken a review of the aspects covered by the
guidance and has identified risk management controls in the key
areas of business objectives, accounting, compliance, operations
and secretarial as being matters of particular importance upon
which it requires reports.
The Directors’ interests in the ordinary share capital of the
Company are disclosed in the Directors’ Remuneration Report on
page 45.
Disclosable Interests
No Director was a party to, or had any interests in, any contract or
arrangement with the Company at any time during the year or at
the year end.
Director’s Indemnities and Insurance
The Company maintains Directors’ and Officers’ liability insurance
which provides appropriate cover for any legal action brought
against its Directors. In addition, deeds of indemnity have been
executed on behalf of the Company for each of the Directors
under the Company’s Articles of Association. Subject to the
provisions of UK legislation, these deeds provide that the
Directors may be indemnified out of the assets of the Company in
respect of liabilities they may sustain or incur in connection with
their appointment.
CONFLICTS OF INTEREST
A Director must avoid a situation where he or she has, or can
have, a direct or indirect interest that conflicts, or has the
potential to conflict with the Company’s interests. The Articles
of Association of the Company give the Directors authority to
authorise potential conflicts of interest and there are safeguards
which apply when Directors decide whether to do so. First, only
Directors who have no interest in the matter being considered
are able to take the relevant decision, and second, in taking the
decision the Directors must act in a way they consider, in good
faith, will be most likely to promote the Company’s success.
The Directors can impose limits or conditions when giving
authorisation if they think this is appropriate.
The Directors have declared any potential conflicts of interest to
the Company. The register of potential conflicts of interests is kept
at the registered office of the Company. It is reviewed regularly by
the Board and Directors know to advise the Company Secretary as
soon as they become aware of any potential conflicts of interest.
STREAMLINED ENERGY & CARBON REPORTING ‘SECR’
The Company’s disclosure with respect to SECR reporting is given
in the Strategic Report on page 25.
PROPOSED DIVIDENDS
The directors propose payment of a final dividend to
shareholders, the details of this are given on page 14 of the
Strategic Report.
The Board believes that the existing arrangements, set out below,
represent an appropriate framework to meet the internal control
requirements. By these procedures the Directors have kept under
review the effectiveness of the internal control system throughout
the year and up to the date of this report.
The Company’s internal controls and risk management systems
have been reviewed with the Manager against risk parameters
approved by the Board. The Board reviews a risk control summary
at its quarterly Board meetings and an annual formal review of
the risk procedures and controls in place at the Manager and
other key service providers is performed.
The Audit Committee reviews, and makes recommendations to
the Board, at least annually, the effectiveness of the Company’s
system of internal controls, including financial, operational and
compliance and risk management systems. The Company’s
system of internal controls is designed to manage rather than
eliminate risk of failure to achieve the Company’s investment
objective and/ or adhere to the Company’s investment policy
and/or investment limits. This system can therefore provide
only reasonable and not absolute assurance against material
misstatement or loss. The Board confirms that necessary actions
would be taken to remedy any significant failings or weaknesses
identified from their review and that no significant failings or
weaknesses occurred throughout the year ended 31 March 2022
and up to the date of this annual financial report.
The Board reviews financial reports and performance against
forecasts, relevant stock market criteria and the Company’s peer
group. In addition, the Manager and custodian maintain their own
systems of internal controls and risk management and the Board
and Audit Committee receive regular reports from the Compliance
Department of the Manager. Formal reports are also produced
annually on the internal controls and procedures in place for the
operation of secretarial, administrative, custodial, investment
management and accounting activities.