A whistleblower is anyone who reports illegal or unethical activity. This could be a person, often an employee, who reveals information about activity within a private or public organisation that is deemed illegal, immoral, illicit, unsafe or fraudulent. These activities can be of the form of fraud, corruption, misconduct, deceiving employees, indiscipline, wilful misuse of power, criminal activity, health and safety violations etc.
Whistleblower handling is critical to assist organisations with their ethics and compliance programs. Many organisations struggle to establish a strong whistleblowing mechanism, resulting in less confidence and trust between the employees and management, and therefore creating a gap that can result in conflicts, disputes and fraudulent activities.
Section 177(9) of the Companies Act, 2013 (the Act) mandates the following classes of companies to constitute a vigil mechanism
Regulation 4(2)(d)(iv) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), inter alia, provides for the listed entity to devise an effective Whistle-blower mechanism enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices.
