Power of Attorney for Demat Account

A Power of Attorney is an authorization letter that allows a person to represent or act on someone else's behalf. It is a written document which declares that Person A authorizes Person B to take important decisions on behalf of person A in legal matters.

As per SEBI, PoA is not compulsory for investors to trade. It's completely an investor's choice to authorize someone or not.

There are two types of Power of Attorney (PoA) in India

1. Specific or Limited Power of Attorney

Limited PoA could give authority to someone for a limited purpose. This type of PoA makes for any specific purpose and usually ends at a time specified in the PoA document. While giving PoA to your stock broker, please make sure your broker is registered with SEBI.

2. General Power of Attorney (PoA)

General Power of Attorney authorizes the person to perform all general activities on the behalf of the original holder.

PoA is not a mandatory document by SEBI or any other exchange. In case the account holder chooses to give PoA to a stockbroker, make sure it should be given in the name of SEBI registered stockbroker only. Never give PoA in the name of any individual person like employees, dealers or any associate etc.

PoA should generally give for a specific period. The period should always clearly mention in PoA document. It should not be left open-ended with the stockbroker.

At the time of giving PoA, the account holder has to take care below things:

1. Give only specific or limited PoA. Do not authorize any stock broker to open or close your account.
2. Clearly specify the period of which PoA is given.
3. Do not authorize your broker to do any off-market transaction. Also do not authorize them to make investment decisions, transfer securities and placing any orders.
4. Confirm the existence of the revocation clause in the PoA document.
5. Ask your broker to send Contract notes, account statement and demat transaction statement to your address on a regular basis.

PoA should be made by the entire account holders. If the account is in a single name, PoA can make in single account holder name. But if the account is in the name of two or more than two people, it should be created with the name of all the account holders.

PoA will automatically get cancelled in case of death of an account holder. In case of a joint account, the survivor has to execute a new PoA.

Yes. As per SEBI, after the execution of the KYC document, the broker is required to give a copy of all the documents. So don't forget to collect all the copies from your stockbroker.

PoA can be given only by the account holder. A family member cannot give PoA on behalf of any family member.

By giving PoA means you are authorizing someone to operate your account. So you have to be very careful before and after giving PoA to someone. You have to ensure that:

1. You are receiving all transaction information like contract notes, quarterly statement of fund and securities and margin information regularly.
2. Keep eye on your bank and demat account in respect of any movement of funds and securities from and to your account.
3. If you find out any discrepancy, you should immediately inform your stockbroker.

PoA is an authority to given by account holder to PoA holder. By giving PoA does not mean that account holder giving away all his rights to operate the account? So after giving PoA to PoA holder, account holder also has all the rights to operate the account.

An account holder can cancel or revoke PoA at any point of time by giving advance notice. At the time of giving PoA, an account holder has to make sure that the right of cancellation is clearly mentioned in PoA.

Yes, but they have a limited extent of recovering the dues. They can dispose off the securities to the extent of recovery of money due from the account holder.