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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Conceptual Framework of Corporate Governance

Ishaan, an employee of Ganga Pharma Ltd, discovers that senior managers are falsifying quality test records. He wants to report it without fear of retaliation. Which governance mechanism is designed for this purpose?

The vigil mechanism or whistle-blower policy, overseen by the audit committee, is the right channel. It allows employees to report unethical conduct or suspected fraud and protects them from victimisation, strengthening accountability to stakeholders and early detection of misconduct.

  1. AVigil mechanism or whistle-blower policy overseen by the audit committeeCorrect
  2. BAnnual general meeting proxy facility
  3. CStatutory audit rotation
  4. DNomination and remuneration policy

Explanation

A vigil mechanism lets directors and employees report genuine concerns and gives protection against victimisation, with access to the audit committee chairperson in appropriate cases. Proxy, rotation and remuneration policy do not serve this function.

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