Financial Daily from THE HINDU group of publications
Tuesday, Dec 16, 2003
Financial Daily from THE HINDU group of publications Tuesday, Dec 16, 2003 |
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Regulatory Bodies & Rulings Corporate - Corporate Governance To stop unethical practices, frauds — SEBI panel moots whistle-blower policy Our Bureau
Mumbai , Dec. 15 IN a bid to stop unethical practices by corporates and prevent frauds, the Securities and Exchange Board of India's committee on corporate governance has suggested "whistle-blower policy" where an official of a company who observes an unethical or improper practice can approach the audit committee of the company without necessarily informing his supervisors. The committee, headed by the Infosys Chief Mentor, Mr N.R. Narayana Murthy, said the intention was to enable the management to establish a mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the company's code of conduct. The mechanism must have adequate provisions to ensure that there is no victimisation of employees who follow this procedure, the committee in its draft report released on Monday said. It also suggested that companies should take measures to ensure that this right of access is communicated to all employees through means of internal circulars. The employment and other personnel policies of the company shall contain provisions protecting "whistle-blowers" from unfair termination and other unfair prejudicial employment practices, the report said. The company has to annually affirm that it has not denied any personnel access to the audit committee of the company in respect to matters involving alleged misconduct and that it has provided protection to whistle-blowers from unfair termination and other unfair or prejudicial employment practices. Such affirmation has to be part of the board report on corporate governance that is required to be prepared and submitted together with the annual report. The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the Audit Committee, the committee stated. The committee also suggested that aggregate tenure of independent directors should be for a maximum nine years. It also suggested that institutional nominees, on the company board, should not be considered as independent directors even as SEBI has deferred implementation of listing agreement's revised clause 49 until further notice. On the issue of definition of independent directors, the panel said, "there shall be no nominee directors and where an institution wishes to appoint a director on the board, such appointment should be made by the shareholders". According to the current listing norms, institutional directors on the boards of companies should be considered as independent directors whether the institution was an investing institution or a lending institution, the panel said.
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