Clause 49

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.

In corporate hierarchy two types of managements are envisaged:

i) companies managed by Board of Directors; and
ii) those by a Managing Director, whole-time director or manager subject to the control
and guidance of the Board of Directors.

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.

Clause VI (ii) of Clause 49 requires all companies to submit a quarterly compliance

report to stock exchange in the prescribed form. The clause also requires that there
be a separate section on corporate governance in the annual report with a detailed
compliance report.

A company is also required to obtain a certificate either from auditors or practicing

company secretaries regarding compliance of conditions as stipulated, and annex
the same to the director's report.

The clause mandates composition of an audit committee; one of the directors is

required to be "financially literate".

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).

A whistleblower (whistle-blower or whistle blower)[1] is a person who exposes misconduct,

alleged dishonest or illegal activity occurring in an organization. The alleged misconduct may be
classified in many ways; for example, a violation of a law, rule, regulation and/or a direct threat
to public interest, such as fraud, health and safety violations, and corruption. Whistleblowers may
make their allegations internally (for example, to other people within the accused organization) or
externally (to regulators, law enforcement agencies, to the media or to groups concerned with the
issues).
Whistleblowers frequently face reprisal, sometimes at the hands of the organization or group
which they have accused, sometimes from related organizations, and sometimes under law.
Questions about the legitimacy of whistleblowing, the moral responsibility of whistleblowing, and
the appraisal of the institutions of whistleblowing are part of the field ofpolitical ethics.

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

connotations found in other words such as "informers" and "snitches". [4]

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]

External whistleblowers, however, report misconduct to outside persons or entities. In these

cases, depending on the information's severity and nature, whistleblowers may report the
misconduct to lawyers, the media, law enforcement or watchdog agencies, or other local, state,
or federal agencies. In some cases, external whistleblowing is encouraged by offering monetary
reward.
Whistleblowers are sometimes seen as selfless martyrs for public interest and
organizational accountability; others view them as "traitors" or "defectors." Some even accuse
them of solely pursuing personal glory and fame, or view their behavior as motivated by greed
in qui tam cases. Some academics (such as Thomas Alured Faunce) feel that whistleblowers
should at least be entitled to a rebuttable presumption that they are attempting to apply ethical
principles in the face of obstacles and that whistleblowing would be more respected
in governance systems if it had a firmer academic basis in virtue ethics.[7][8]

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