The modern day whistleblower is usually an insider, who has first-hand information of fraud and other kinds of misbehaviour taking place in a company. This person will only come forward if they are assured that their identity won’t be compromised; the data collected will be treated with respect for its confidentiality as well as thoroughness (i e investigation conducted) basis what was revealed by this whistle blower’s perspective which ultimately helps put things right again within his/her organization while still keeping everyone safe from further wrongdoing. Learn how to make a Whistleblower Disclosure Policy for your company and protect yourself and your employees.
Whistleblowers are not new, but they are on the rise. Having an effective process to address whistleblower information is an important part of any organization’s compliance efforts. Whistleblowers will continue to play a significant role in the government’s enforcement agenda, and corporations should expect that whistleblower activity will increase in the coming years. The increased risk of whistleblower disclosures has led many companies to consider how best to handle this information internally while protecting their legal interests while maintaining their social responsibilities.
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A key element of an effective ESG-compliant entity is one that incorporates a corporate culture that encourages voices to speak out and doesn’t just set forth policies with a check-the-box approach. This is especially true when it comes to the practice of whistleblowing. The effectiveness of whistleblowing as a tool to shine the spotlight on underlying wrongs and frauds within a company is well known. The absence of an effective and robust whistleblowing policy speaks to the manner in which human rights and overall corporate culture are upheld, amongst other critical ESG criteria. In this article, we understand what ails effective whistleblowing in private companies in India.
The legal framework in India pertaining to whistleblowing, protection of whistleblowers and its enforcement has largely been geared towards listed companies. The Companies Act, 2013 provides for a ‘vigil mechanism’ for directors and employees of listed companies and other companies prescribed therein2, to seek recourse for the reporting of malfeasance and prevent victimisation.
The Securities and Exchange Board of India (“SEBI”) requires the listed companies to have incentive-based whistleblower policies that rewards employees for reporting insider trading taking place within the company. SEBI recently strengthened this monetary incentive to ₹10 crores, with the aim of empowering whistleblowers and strengthening its resolve against insider trading.
Amidst increasing cases of unlawful practices being exposed by employees in listed companies, the status of whistleblowing policies in unlisted, private companies, has become all the more pertinent to address. For private companies, the whistleblowing regime remains mostly policy-driven.
Companies which have implemented such mechanisms, are fraught with an inherent conflict of interest as members of whistleblowing committees are employees of the company and suffer from prejudices, which impairs their objectivity in the handling of internal complaints. As a result, it is not unusual to find that certain complaints, which could prove to be detrimental to the public image and reputation of the company, are preferred to be brushed under the carpet.
The Board of Directors are obliged to act in good faith and promote the objects of the company in a manner which benefits the members as a whole and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment. They are to exercise their duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
The Securities and Exchange Board of India (“SEBI”) requires the listed companies to have incentive-based whistleblower policies that rewards employees for reporting insider trading taking place within the company. SEBI recently strengthened this monetary incentive to ₹10 crores, with the aim of empowering whistleblowers and strengthening its resolve against insider trading.
The Securities and Exchange Board of India is a regulatory body for securities and commodity exchanges in India under the direction of the Ministry of Finance, Government of India. It was formed on April 12, 1992, and has statutory authority from the SEBI Act, 1992.
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In the wake of a national financial crisis, concerns about who should be entitled to whistleblower protection have arisen within certain industries, including banking and finance. Critics worry that whistleblowers will go so far as to instigate lawsuits simply for personal gain – rather than to stop wrongdoing – if companies are forced to pay damages.
Whistleblowers often face harsh, sometimes illegal responses from their employers. A 2007 survey conducted by the Association of Certified Fraud Examiners found that one-third of whistleblowers were wrongfully terminated as a result of reporting fraud at their company. It is estimated that companies engage in retaliation against 15 percent to 30 percent of whistleblowers.
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ESG: The New Way of Doing Business in Mumbai
Business and organizational sustainability is a complex issue in Mumbai, with many stakeholders and perspectives. It’s also an area where the stakes are high – if we don’t get it right, there will be dire consequences for our communities and the planet.
The good news is that more investors are taking notice, (PwC ESG survey), of ESG issues when they invest inMumbai companies and organizations. In fact, over the past decade institutional investors have been increasingly incorporating Environmental, Social and Governance factors into their investment decisions. And soon it will be impossible to win any RFP’s without it.
We want everyone (not just big institutions in Mumbai) to be able to incorporate ESG-related risk into their actions because Companies that don’t adapt to these changes will not survive. This change has many companies in Mumbai scrambling to figure out how they can stay competitive and be profitable while also contributing to a better future.
ESG The Report is one solution that helps businesses in Mumbai find their niche in this new landscape by providing information on risks and opportunities related to environmental, social and governance factors affecting them today. Our report offers insights into what investors are looking for from companies in Mumbai and around the globe.
ESG Frameworks provide investors with insight into how companies are performing in terms of corporate governance, social issues, labour standards and environmental impact. Ask about our ESG Frameworks package to help you get started on making your company, department or organization diverse, equitable and inclusive for all stakeholders.