What is POA? - Is It Safe to Sign the POA?

Vikas Yadav. Friday, August 27, 2021.

POA stands for Power of Attorney. If you are into movies and TV shows, there’s a good chance that you must have heard about Power of Attorney from the actors. But do you know what a power of attorney is? How does it function in the share market? Why is POA required?

This article is all about the Power of Attorney in the share market and the queries that come with it.

Without wasting any time, let’s take you directly to the topic. 

Content:

  • What is Power of Attorney in Share Market?

  • Why is POA Required?

  • Can I sell Shares without POA?

  • Can I do Intraday Trading without POA?

  • Conclusion

What is Power of Attorney in Share Market?


Power of Attorney is nothing but a legal document that enables a person to make decisions and actions on your behalf. 

Power of Attorney in the share market is a document signed between a trader or investor and the stockbroker. POA document gives limited authority to the stockbroker to debit the shares from your Demat account when you sell a particular stock/share on the stock exchange.

POA is a physical legal document, so it needs to be signed and submitted to the stockbroker in the physical form.

You must be wondering, is it necessary to sign a POA? Can I not sell the shares myself?

These are the obvious questions that come to your mind, and the next section of this article explains the same.

Why is POA Required?


It's a known fact that you need a trading account for trading in the share market (Click here if you don’t have it already). When you buy some shares from the share market, you need a place to store them. Then comes a Demat account that holds your shares, just like your bank account holds your money (open a free Demat account by clicking here). 

Buying shares doesn’t require a power of attorney; you may buy shares to your level of satisfaction. But the actual work starts when you try to sell those shares because stock exchanges are a real-time market; if someone is buying a share, there’s someone who’s selling it.

Whenever you sell the shares online, the brokers debit the shares from your demat account and submits them to the stock exchange. 

If you have an individual demat account, there’s an alternate way to sell your shares without a POA, it is through the CSDL TPIN. It is quite a swift process and it all happens in a fraction of a second.

Although you could sell shares with a POA, there are some limitations to it. Keep reading and find it out yourself in the next section of the article

Can I sell Shares without POA?


Yes, you can sell your shares without a POA.

You will be able to sell shares by using the CDSL TPIN mode. This mode has a restriction of a maximum of ₹ 1 crore sell transactions per day. The off-market transfers are limited at ₹ 2 lakhs per scrip and overall ₹ 10 lakhs per day.

If you have a portfolio of over ₹ 1 crore and wish to sell more than ₹ 1 crore of stocks from your holding in a day, you will have to send us the POA.

We will send you the POA Form via mail when your account is activated or you can find the POA Form here.

Can I do Intraday Trading without POA?


Yes, you may do intraday trading and even futures and options without a POA. So, power of attorney is not a mandatory document to be signed, nd it doesn’t come into the picture when you buy shares.

It might only be required, when you try to sell those shares from your demat account or pledge them margins in futures and options trading.

Conclusion


Power of Attorney or POA meaning is nothing but a legal document that enables a person to make decisions and actions on your behalf.

Power of Attorney in the share market is a document signed between a trader or investor and the stockbroker. POA document gives the limited authority to the stockbroker to debit the shares from your Demat account when you sell a particular stock/share.

Aliceblue always instructs its investors to read all the documents before signing them, and make sure you sign a POA only with a SEBI registered stock broker like Aliceblue. 

I hope this clears the queries regarding power of attorney in the share market. OPEN YOUR ACCOUNT WITH ONE OF THE SAFEST BROKERS IN INDIA NOW!


Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time

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Author : Vikas Yadav
Vikas Yadav

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