The term ‘blowing the whistle’ essentially means to expose information of someone’s wrongdoings. With regard to any organization, disclosing information to appropriate authorities or even the public about the wrongful activities done by an individual or several people is whistleblowing, and the person disclosing this information is called a ‘whistle-blower’.
Section 177(9) of the Companies Act provides for establishing vigil mechanisms. It is stated under this provision that every listed company or any company of such class, shall set up mechanisms wherein genuine concerns can be reported by directors and employees.
Section 177(10) of the Companies Act requires that ample safeguard measures should be taken against the victimization of any such person who uses the vigil mechanisms.
A whistle-blower is someone who makes any kind of disclosure. And the information disclosed is usually concerning any improper, unethical, and wrongful pursuit taken by any individual or group with respect to the company. Some well-known whistle-blowers include people such as Satyendra Dubey who exposed corruption in the Golden Quadrilateral project in 2003, later he was shot dead in the same year. There could have been several instances such as this, where these solitary warriors and their dreadful plight may have not even seen the light of day. Therefore, legislation protecting such people is of the utmost importance.
In India, the Whistle-Blowers Protection Act, 2014 provides measures and mechanisms to probe any alleged corruption and exploitation of power by public servants and to protect those who expose any such wrongdoings.
The main intent or purpose of this Act was to accept complaints and concerns brought up concerning any allegation of corruption and wilful exploitation and abuse of power by any public servant. Under this Act mechanisms for investigation of these allegations and protection of those who make these allegations.
As aforementioned, the Companies Act, 2013, and its rules require that listed companies and any such other company of the same class shall establish vigil mechanisms for reporting genuine issues and further calls for adequate protection and safeguards against victimization of people who make use of the mechanism.
Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 calls for the same. It directs all companies which are required to constitute an audit committee to oversee these vigil mechanisms through the same committee. Under this, along with the safeguards the whistle-blowers are also given direct access to the Chairperson of the Audit Committee or any other director who has been nominated to act as the Audit Committee, in exceptional cases.
The Securities Exchange Board of India through amendments made to SEBI (Prohibition of Insider Trading) Regulations, 2015 mandated all public companies to establish and institutionalize vigil mechanisms along with a whistleblower policy. In 2019, regulations regarding a whistle-blower’s protection and conduct were introduced by including Chapter IIIA to the SEBI (Prohibition of Insider Trading) Regulations, 2015. SEBI had also discussed providing incentives to whistle-blowers in case the information disclosed turned out to be legitimate.
The Companies (Auditor’s Report) Order, 2020 tasks statutory auditors of companies with further responsibilities concerning complaints made by whistle-blowers. This order requires companies to have almost complete disclosure and facilitates the sharing of information to auditors, especially concerning whistle-blower complaints.
Day by day, there is a significant increase in employee vigilance and there is a rise in whistle-blower complaints. Yet, there are significant lacunae of proper legislations and measures to handle these complaints. But, the most important of all would be to address the lack of implementation of adequate safety measures for these whistle-blowers who come forward in good faith for the greater good.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
