WHISTLE BLOWER POLICY IN INSURANCE COMPANIES
A Whistle Blower is a person who exposes any kind of unethical activity, item or information that is deemed to be illegal, unconstitutional or not correct in an organisation. A business organisation is established for profit through business transactions. The business should be carried out according to rules and regulations of law of land. Anything which is against law of land and against Public Policy is not allowed. Anything, which is incorrect, unethical against law is also against the organisation and should be stopped or early detected so that appropriate remedial actions should be taken.
A person who reports such act is called a “Whistle Blower”.
A Whistle Blower brings such unethical, irregular or unconstitutional acts to the knowledge of his /her superiors or to the management of the organisation. He may by contacting a third party related to the organisation can bring above matter in view of the management. The third party may be Statutory Auditor, Consultants or other authorities not related to day to day work of concerned organisation.
“Wikipedia” defines it as “A Whistle Blower “is a person who exposes any kind of information or activity that is deemed illegal, unethical or not correct within an organisation that is either public or private”.
IRDA Guidelines also advised to Insurance Companies to put in place a “Whistle Blower” policy, whereby mechanisms exist for employees to raise concerns internally about possible irregularities, governance, weaknesses, financial reporting issues or other such matters.
An employee through this mechanism brings that information or report that information to the management or third party.
A Whistle Blower Policy should cover following matter;
i) Awareness of the employees that such channels are available, how to use them and how their report will be handled;
ii) Handling of reports received confidentially, for independent assessment, investigation and where necessary for taking appropriate follow-up actions;
iii) A robust mechanism to protect employees, who make report in good faith and for benefit of the organisation;
iv) A system of briefing to Board of Directors;
v) A full proof system and learning process to encourage employees to report such activities by using such mechanism.
This Whistle Blower Policy provides a system to the Directors, Employees and Outsiders to report without fear any instance of actual or suspected violation, wrong doings or any unethical or improper doing, which will impact adversely on image or financial position of an organisation, through appropriate forum.
WHISTLE BLOWER PROCESS;
OBJECTIVE;
The Policy needs to ensure that concerns are properly raised, appropriately investigated and addressed by attempting to;
i) Define the events that trigger a whistle blower complaint;
ii) Define process of lodging complaint;
iii) Define various committees/teams and their roles in implementation of the Policy;
iv) Outline full proof process of investigation and handling of information;
v) Outline process to protect employee by being discriminated for reporting such information within an organisation or policy to not disclose employee’s information within organisation.
EVENTS /COMPLAINTS TO BE COVERED UNDER THE POLICY
The IRDA Guidelines don’t provide list of events/nature of complaints to be consider under the Whistle Blower Policy. Following are some activities, which must be considered;
i) All unlawful acts whether civil or criminal;
ii) Failure or breach to implement well define Company Policies or various matters;
iii) Knowingly breaching of any rules or regulations of Central/State or other law of lands, even in personal capacity;
iv) Unprofessional conduct or business activities by any stakeholder of the company;
v) Fraudulent or corrupt practices, within or outside of organisation such as giving bribe to take or seek undue advantage or accepting any gift from outsiders to compromise on the policies of the Company;
vi) Any practice which is harmful to any person or property of public or the organisation;
vii) Failure to take appropriate step to mitigate any risk or to comply with any law or regulation, which will impact heavily on the Company.
APPLICABLE PROVISIONS OF COMPANIES ACT, 2013
Section 177 of the Companies Act, 2013, certain companies have to establish Vigil/Whistle-blowing mechanism to report unethical behaviour or act or other concern to the management.
Section 177(9)- provides that every
a. Listed Company;
b. Campines which accept public deposit;
c. Companies which have borrowed money from banks and public financial institution in excess of Rs. 50.00 Crores
Shall establish a Vigil Mechanism for directors and employees to report genuine concern in such manner as may be prescribed.
Section 177(10)- Safeguard against victimization
a) Policy against victimization of person using the Vigil Mechanism;
b) Provide access to the Chairman of Audit Committee in appropriate or exceptional cases;
c) Display Vigil Mechanism Policy on the Website of the Company;
d) A report on “Vigil Mechanism” to be included in the “Board Report”.
Schedule IV- Code for Independent Directors;
a) Ascertain and ensure that the company has an adequate and functional or exceptional case;
b) Ensure that interests of a person who uses the mechanism are not prejudicially affected.
WHISTLE BLOWING CHANNEL
- Whistle Blowing Team Management /Officer
- Website Link / Application
- Whistle Blower Box
- Written Letter to Whistle Blowing Team
- Email Address of Whistle Blowing Team
PROVISIONS UNDER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS 2015
Regulation 4(2)(d)(iv)– Provides that the listed entity shall derives an effective whistle blower mechanism enabling stakeholder, including individual employees and their representative bodies, to freely communicate their concern about illegal or unethical practices.
Regulation 46(2) (e)- provides that the listed entity shall disseminate the details of establishment of Vigil Mechanism / Whistle-blower Policy information on website.
Regulation 18(3) read with Part C Role of Audit Committee and Review of Information by the Audit Committee – provides that Audit Committee shall review the functioning of the Vigil Mechanism / Whistle-blower Policy of the Company.
Schedule V Corporate Governance Report- Provides that the Annual Report should contain a separate section on Corporate Governance Disclosure. The Corporate Governance Report should make a specific disclosure with regard to the details of establishment of Vigil Mechanism/ Whistle-blower Policy, and affirmation that no personnel has been denied access to the Audit Committee.
CONCLUSION: being a democratic country our policy makers seek that a democratic culture should be prevail in public as well as in Private organisations. Every person whether he is a stakeholder or not should be given a mechanism to report his concern or any unethical behaviour to the appropriate forum. If Whistle Blower Policy/ Mechanism is appropriately implemented in any organisation, whether it is government or private, shall prevent future loss related to financial matter, image or public at large.
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