- How to protect Demat Account after giving Power of Attorney (PoA)?
- How you can make sure that Power of Attorney (PoA) cannot be misused?
- Is there any option available to avoid misuse of Power of Attorney (PoA) by Stock broker?
- Is it mandatory to give Power of Attorney (PoA) for demat account opening?
- Can I sell shares without giving Power of Attorney (PoA)?
ProStocks is both Depository participant and Stock Broker. ProStocks will open your Trading as well as Demat Account. Whenever you do delivery based buying of shares , such shares will be transferred to your Demat Account by debiting Pool Account (Demat Account where Stock Broker receives shares from Stock Exchange)of Stock Broker and crediting client Demat Account. When Stock Broker is debiting its own Demat Account, it has authority to do.
Whenever you sell the shares resulting into delivery sell, Shares need to be given to Stock Exchanges towards sell obligation through Stock Broker. In this case Client Demat Account needs to be debited for crediting Pool Account of Stock Broker for onward securities Pay In to Exchanges. Stock Broker does not have any authority to Debit Demat Account and such authority comes from Power of Attorney (PoA) given by Client.
Power of Attorney (PoA) given by Client to Stock Broker is for Limited purpose, which are given here in below and also called, limited purpose Power of Attorney (PoA):
- Meeting shares pay in obligation against sell of shares
- Meeting margin obligation if limits were given against shares lying in Demat Account or limits to be given
- Meeting Trade related obligation like shortfall in funds pay-in, securities pay in, penalty and fine levied by exchanges etc.
- Meeting Mutual Fund Redemption submitted by client or requested by client through exchange platform
- To meet any other trade related outstanding liability of client towards Stock Broker
What happens if Power of Attorney (PoA) is not given?
- Stock Broker may not allow delivery based selling of those shares which are lying in Demat Account without Power of Attorney (PoA)
- Client need to do securities pay in through physical DIS slip to its Depository Participant one day before securities pay in day otherwise this will result in short delivery and shares may go in auction.
- Client need to do securities pay in through TRUST facility if subscribed. In this Client send SMS to Depository (and not Depository Participant) as confirmation of his securities pay in obligation and consent to do securities pay in.
- Client need to do securities pay-in through internet based login to the website of Depository and not Depository Participant. In case of CDSL, Client must have taken easiest facility in advance.
How to secure your holdings in demat account?
Earlier there were no option available to secure the holdings in demat account. As given power of attorney (PoA) to the stock broker/ relatives, can be misused. Now to secure the use of power of attorney (PoA) there is an option of freeze & unfreeze in CDSL’s easiest account, through which investor can protect their holdings. With Freeze option Demat account holder can freeze the holding fully or partially in the demat account and those holdings cannot be taken out by anyone including PoA holder, until Demat Account holder unfreeze them.
To know more about freeze and unfreeze option visit below link
