Vigil Mechanism

Vigil Mechanism

The meaning of the term vigil is purposeful surveillance to guard or observe. Companies Act, 2013 has introduced new provisions relating to setting up by specified companies a mechanism known as ‘Vigil Mechanism’ for directors and employees to report genuine concerns [Section 177(9)]. Following provisions need to be complied with:

• Every listed company and unlisted public company required to constitute audit committee, shall establish vigil mechanism,
• There should be adequate safeguards against the victimization of person who use such mechanism,
• There should be provision for direct access to chairperson of audit committee in appropriate or exceptional cases,
• Disclosure of Vigil Mechanism establishment on company’s website and in Board report.