Abstract

Under this section, listed companies, and certain other classes of companies as may be prescribed by the government, are required to establish a vigil mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the company's code of conduct. The mechanism should provide for adequate safeguards against victimization of whistleblowers and should ensure that the identity of the whistleblower is protected. The Act also mandates that the audit committee of the company shall oversee the vigil mechanism and review the adequacy and effectiveness of the mechanism. The audit committee must also ensure that the policy on vigil mechanism is communicated to all employees of the company and that the mechanism is disclosed in the company's website. The provision has led to an increase in the reporting of unethical behaviour, actual or suspected fraud, or violation of the company's code of conduct. This has helped companies identify and address such issues, thereby improving their overall governance and ethical standards. Protection of whistleblowers: The vigil mechanism established under Section 177 provides adequate safeguards against victimization of whistleblowers and ensures that their identity is protected. This has encouraged more employees to come forward and report concerns without fear of retaliation. This highlights the need for greater awareness and implementation of the whistle-blowing mechanism to foster a healthy and safe environment for whistleblowers to come forward and report concerns. Overall, the findings suggest that Section 177 has been effective in promoting corporate governance and transparency in India. However, there is still room for improvement, particularly in terms of greater awareness and implementation of the whistle-blowing mechanism.

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