"Though the concept of 'Whistle Blower' is a landmark for the Corporate Governance and Section 177 of the Companies Act, 2013 has specific mention about vigil mechanism, its implementation is not upto the mark in the Ind

Section 177(9) of the Companies Act, 2013 (the Act) required that every listed company or prescribed class of companies, shall establish a vigil mechanism for directors and employees to report genuine concerns. Further, rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 prescribes the following class of companies: (a) the Companies which accept deposits from the public; (b) the Companies which have borrowed money from banks and public financial institutions in excess of fifty crore rupees. Regulation 4(2)(d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) requires that the listed entity shall devise an effective vigil mechanism/whistle blower policy enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices. Further, regulation 22 of LODR Regulations requires as under: (1) The listed entity shall formulate a vigil mechanism/whistle blower policy for directors and employees to report genuine concerns. (2) The vigil mechanism shall provide for adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism and also provide for direct access to the chairperson of the audit committee in appropriate or exceptional cases. The fact that the Act expressly requires that whistle-blowers be provided direct access to the Chairman of the Audit Committee and for adequate safeguards to avoid victimisation of the whistle-blowers, further indicates the importance of the whistle blowers mechanism. The ineffective protection mechanisms for whistle-blowers might result in creating an atmosphere of fear for whistle-blowers. But, it still does not stop some crusaders from going ahead and blowing off the lid of corruption. However, in some organisations the whistle Blower Mechanisms is followed just for compliance and not in spirit. The main reason is that there is the general fear among the employees, i.e., they may get adverse consequences if they become the root cause. Therefore, it can be said that protection to the whistle-blowers, is essential from a corporate governance perspective and effective implementation of whistle blower mechanism will create high chances of early fraud detections.