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CMA Final · Cost and Management Audit · Operational Audit and Internal Audit under Companies Act, 2013

Which statement about the vigil mechanism under Section 177(9) and (10) is correct?

The vigil mechanism must have safeguards against victimisation and allow direct access to the Audit Committee chairperson in appropriate or exceptional cases. It covers directors and employees, applies to every listed company, and its details must be disclosed on the website, if any, and in the Board's report.

  1. AIt must allow direct access to the chairperson of the Audit Committee in appropriate or exceptional cases, with safeguards against victimisationCorrect
  2. BIt is meant only for shareholders and not for employees
  3. CIt need not be disclosed on the company's website or in the Board's report
  4. DIt applies only to unlisted companies

Explanation

Section 177(10) requires adequate safeguards against victimisation and provision for direct access to the Audit Committee chairperson in appropriate or exceptional cases. Section 177(9) covers directors and employees and applies to every listed company. Details must be disclosed on the website, if any, and in the Board's report.

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