Provisions- Establishment of Vigil Mechanism

As per Sec. 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014

-Every listed company or

-The Companies which accept deposits from the public or

-The Companies which have borrowed money from banks and public financial institutions in excess of 50 crore rupees.

Shall establish a vigil mechanism for directors and employees to report genuine concerns in such manner as may be prescribed. The vigil mechanism shall provide adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. The details of establishment of such mechanism shall be disclosed by the company on its website, if any, and in the Board’s report.

Whistle Blower Policy

The companies which are required to constitute an audit committee shall oversee the vigil mechanism through the committee and if any of the members of the committee have a conflict of interest in a given case, they should recuse themselves and the others on the committee would deal with the matter on hand.

In case of other companies, the Board of directors shall nominate a director to play the role of audit committee for the purpose of vigil mechanism to whom other directors and employees may report their concerns.

In case of repeated frivolous complaints being filed by a director or an employee, the audit committee or the director nominated to play the role of audit committee may take suitable action against the concerned director or employee including reprimand.

Points to be considered:

S. No. Area of Concern Existing Proposed/ Suggestions
1 Structure of the existing “Ethics Committee In Existing Scenario our Company has an ethics committee which is constituted as follows :

1.  CFO

2.  Head- HR

3.  Head-Vigilance

And secretary to the Committee which shall look into the concerned disclosure and report it to the Ethics Committee.

2. Exceptional Cases in the existing policy has not been defined As per Clause 7 (c) of the existing policy which reads as:

“Direct access to the Audit Committee Chairman in exceptional Cases can be given to the Whistle Blower based on the decisions by Ethics Committee”

Exceptional Cases for the purpose of direct reporting should be clearly defined in the policy in order to avoid confusion and ambiguity.
3. Name and Contact Details of the reporting authorities Existing Whistle Blower policy has not provided details of the reporting authorities to whom the cases causing Concerned to be reported Name, Designation, Phone Numbers and Email IDs should be provided in the policy.
4. Direct reporting in Exceptional Cases Existing policy specifies that Reporting of exceptional cases to Chairman of the Audit Committee is based on the decision of the Ethics Committee. Since there is an involvement of Ethics Committee in reporting Exceptional Cases to the Chairperson of the Audit Committee, it defeats the motive of Direct Reporting mechanism.
5. Online Reporting of Disclosures 

“Creation of Ethics Portal”

Currently our Company has no such facility available of online reporting. Online Ethics Portal should be created and the direct link/URL should be informed to all the employees and the Directors of the Company.
6. Procedure for Investigation and the time limits for completion of Investigation. Existing policy does not specifies the Procedure for Investigation of the matter reported, also nothing has been specified in the policy with respect to the maximum time for the purpose of conclusion of the investigation Investigation procedure should be time bound.

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