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Clause 49 of the Listing Agreement to the Indian stock exchange comes into effect from 31
December 2005. It has been formulated for the improvement of corporate governance in all listed
companies.
As per Clause 49, for a company with an Executive Chairman, at least 50 per cent of
the board should comprise independent directors. In the case of a company with a
non-executive Chairman, at least one-third of the board should be independent
directors.
It would be necessary for chief executives and chief financial officers to establish
and maintain internal controls and implement remediation and risk mitigation
towards deficiencies in internal controls, among others.
It is mandatory for all listed companies to comply with the clause by 31 December
2005.
In late 2002, SEBI constituted the Narayana Murthy Committee to assess the adequacy of
current corporate governance practices and to suggest improvements. Based on the
recommendations of this committee, SEBI issued a modified Clause 49 on 29 October 2004 (the
revised Clause 49) which came into operation on 1 January 2006.
The revised Clause 49 has suitably pushed forward the original intent of protecting the interests
of investors through enhanced governance practices and disclosures. Five broad themes
predominate. The independence criteria for directors have been clarified. The roles and
responsibilities of the board have been enhanced. The quality and quantity of disclosures have
improved. The roles and responsibilities of the audit committee in all matters relating to internal
controls and financial reporting have been consolidated, and the accountability of top
managementspecifically the CEO and CFOhas been enhanced. Within each of these areas,
the revised Clause 49 moves further into the realm of global best practices (and sometimes,
even beyond).
Origin of term[edit]
The term whistle-blower comes from the whistle a referee uses to indicate an illegal or foul play.[2]
[3]
US civic activist Ralph Nader coined the phrase in the early 1970s to avoid the negative
Internal[edit]
Most whistleblowers are internal whistleblowers, who report misconduct on a fellow employee or
superior within their company. One of the most interesting questions with respect to internal
whistleblowers is why and under what circumstances people will either act on the spot to stop
illegal and otherwise unacceptable behavior or report it.[5] There are some reason to believe that
people are more likely to take action with respect to unacceptable behavior, within an
organization, if there are complaint systems that offer not just options dictated by the planning
and control organization, but a choice of options for absolute confidentiality.[6]
External[edit]
Although whistleblowers are often protected under law from employer retaliation, there have
been many cases where punishment for whistleblowing has occurred, such
astermination, suspension, demotion, wage garnishment, and/or harsh mistreatment by other
employees. For example, in the United States, most whistleblower protection laws provide for
limited "make whole" remedies or damages for employment losses if whistleblower retaliation is
proven. However, many whistleblowers report there exists a widespread "shoot the messenger"
mentality by corporations or government agencies accused of misconduct and in some cases
whistleblowers have been subjected to criminal prosecution in reprisal for reporting wrongdoing.
Circumstances of fraud
The circumstances in which fraud can exist are enormously diverse. Some of the types
include: commercial fraud, fraud against governments, consumer fraud, migration fraud,
securities fraud, superannuation fraud, intellectual property fraud, computer and
telecommunications fraud, insurance fraud, plastic card fraud, charitable contribution
fraud,
identity-related fraud, advance fee fraud, art fraud, health care fraud, the list goes on and
on,
and new opportunities for deceptive conduct arise all the time