POA and Nominee 101

POA and Nominee 101

POA (now DDPI): 
- Power of Attorney (POA) for Demat Account to the broker is a legal document. It gives limited or full legal authority to the broker to operate your Demat account as per the agreed terms in the POA document signed by you.
- By giving PoA to the broker, you are allowing him to withdraw the shares from your Demat account on your behalf. Power of Attorney is not mandatory. It is your choice to give it or not. No broker can force you to give POA.

If you do not give PoA to anyone, you are the sole operator of your Demat account. If you sell the share today, you have to transfer the share to the broker's Demat account by the next working day so that he can deliver them to the buyer. If you fail to do that, it is the broker's obligation to provide the shares to the buyer. If can the share doesn't reach the broker in time, he has to buy them from the market and settle the transaction. This may result in penalties for you. You also have to pay the difference in the prices.

To avoid this manual transaction, almost every investor gives POA, for convenience in trade settlements.

Key Facts about Demat DDPI/POA:
  1. Demat PoA  or DDPI is not needed for F&O trading.
  2. Brokers and depository both send real-time alerts for any transactions in your Demat account.
  3. The Demat PoA is valid until you revoke it or close the Demat account.
  4. In case you are short of margin in your Demat account, your broker could sell your Demat holding to recover the money without informing you in advance. This is part of the PoA agreement.
You can use DDPI to authorize your broker and depository participant to access your demat account only to meet pay-in obligations for settlement of trades executed by you.

The use of DDPI will be limited only for two purposes:
1. To transfer securities held in your account towards stock exchange related deliveries or settlement obligations
2. To pledge/re-pledge securities

Post DDPI, please follow the below guidelines for authorization of other transactions:

Type of Transaction                                                             Post DDPI, Authorized via
Corporate Actions (Buyback, Takeovers, Delisting, etc)                                                                 e-DIS
Mutual Fund & Rights Entitlement Sell transactions                                                                   CDSL TPIN & OTP

Existing PoAs will continue to remain valid till the time you revoke the same.
If you have not submitted your POA, and do not wish to submit POA/DDPI – You can continue trading the way you currently do, which means:

1. You need to authorize your sell transactions using CDSL TPIN and OTP
2. For any Corporate Actions (Buyback, Takeovers, Delisting, etc) – you will need to complete the settlement via e-DIS

Nomination: The nomination is done to appoint a nominee to who the securities held in the Demat account will be transferred in case of death of the account holder. The facility is available only for individual and Demat accounts. In absence of a nominee, your legal heir has to establish himself as the rightful heir before the court to get ownership of the securities.

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