WHISTLEBLOWING – EFFECTIVE KEY TO GOOD CORPORATE GOVERNACE
BY GRISHMA SHETTY AT LEXCLIQ
Whistleblowing is the act of exposing malpractices in the company to others. No organization can be said to be immune from the treat of malpractices. This is an effective mechanism to ensure corporate governance in a company. The concept originated form the practice of blowing whistle by the policemen whenever they saw any crime bring committed. A whistle – blower can report the wrongdoings to the high official of the organization. He has the option to file a law suit against the wrongdoer or expose it to the public.
Effective key to good corporate governance-
Corporate whistleblowing is when the wrongdoing of a corporate are exposed by the whistleblower. Corporate governance is a structure of good practices towards which the affairs of the company are directed. For a healthy corporate structure, the absence of any kind of wrongdoings is essential. The corporate employees are equally responsible to maintain it. This is because they are the one’s who have the opportunity to witness any unethical incident in the company.
Good governance in companies requires transparency and disclosure of important information’s. It aims at business integrity, accountability towards shareholders, protection of shareholders. This transparency and accountability can better be maintained if the employees of the company provide their support in maintaining it. They can extend their help by reporting any wrongdoing they come across in the company.
The increasing number of corporate scams are posing threat to the corporate governance structure of a company. With such case, exposing the wrongdoer .this makes the whistleblowing as important key to achieve good corporate governance. Though cases of wrongdoings in corporate are on an increase, the whistleblowers have also actively taken part to expose them.
Things that can be reported through whistle blowing –
- Breach of justice and law
- Health or safety danger to someone
- Damage to the environment
- Criminal offences
- Violation of law in companies act or other act related to company
- Misappropriation of funds.
India’s stand on whistleblower laws –
- Companies act, 2013:
This act aims to build a good corporate structure in a company. This act came after various corporate scandals were seen by india and also the world at large. Under section 210 of the act, the central government has the power to investigate the affairs of the company in the public interest. Under section 211 of the act, the central government has the power to establish an office called as serious fraud investigation office, for investigating any kinds of fraud in the company.
The market regulator in SEBI (prohibition of insider trading regulation act, 2015) provides a reward to the whistleblowers if the concerns expressed by them are revealed to be true and legitimate.
- Whistleblower protection act, 2014:
This bill was proposed in 2011. It finally became a law in 2014. The act provides for a mechanism under which allegations of power misuse or corruption allegations can be made against a public servant.
- Protected disclosure scheme for private sector and foreign banks:
It is a measure to increase the public’s confidence in the financial sector. Under this, all the private sector and foreign banks are asked by the RBI to have a whistleblowing policy.