Definition
Whistleblower Policy
A whistleblower (vigil mechanism) policy lets employees and others report unethical behaviour, fraud or violations confidentially without fear of retaliation.
Under the Companies Act and SEBI LODR, listed companies and certain others must establish a vigil mechanism allowing directors and employees to raise concerns about wrongdoing, with safeguards against victimisation and direct access to the audit committee chair in appropriate cases.
An effective whistleblower policy is a key early-warning system in governance, surfacing fraud and misconduct before it escalates. The audit committee oversees its functioning and reviews the complaints received.
Related terms
- Audit CommitteeThe audit committee is a board sub-committee that oversees financial reporting, internal controls, audits and related-party transactions.
- Related-Party TransactionsRelated-party transactions (RPTs) are deals between a company and parties connected to it, such as promoters, directors or group entities.
- Corporate GovernanceCorporate governance is the system of rules, practices and controls by which a company is directed, overseen and held accountable to its stakeholders.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.