Module: | SEBI LODR & Corporate Governance Frameworks
Q14: Consider the following statements regarding the Vigil Mechanism (Whistle-blower policy) under corporate governance norms for 2025:
1. Every listed company must establish a vigil mechanism for directors and employees to report genuine concerns.
2. Unlisted public companies that have accepted deposits from the public are exempt from establishing a vigil mechanism.
3. The vigil mechanism must provide adequate safeguards against the victimization of persons who use the mechanism.
Which of the above statements is/are incorrect?
2. Unlisted public companies that have accepted deposits from the public are exempt from establishing a vigil mechanism.
3. The vigil mechanism must provide adequate safeguards against the victimization of persons who use the mechanism.
Which of the above statements is/are incorrect?
✅ Correct Answer: B
🎯 Quick Answer:
B. Only 2 is incorrect.Structural Breakdown: Statement 1 is correct.
Statement 2 is incorrect; companies that accept public deposits or have bank borrowings exceeding Rs 50 Crore must establish this mechanism.
Statement 3 is correct.
Historical/Related Context: The prominence of whistle-blower policies surged after scandals were exposed by insiders rather than external auditors.
Causal Reasoning: Protecting the identity of a whistle-blower is essential as employees are the first line of defense against fraud.