The Securities and Exchange Board of India (SEBI) on August 27, 2020 has issued a circular for the execution of Power of Attorney (POA) by the client in the favour of the Stockbroker and the depository participant. SEBI had issued the guidelines for the execution of POA vide Circular no. CIR/MRD/DMS/28/2010 dated August 31, 2010.
Further, SEBI has observed that POA is being obtained from the investors as a KYC process in regards with the opening process. Additionally, the stockbrokers are misusing the POA obtained from the client for the authorization of certain activities. Thus, it has been reiterated:
• SEBI has clarified that the POA execution is not mandatory for the purpose of the opening process.
• POA that has been executed by the client shall be used for the following services:
1. For the purpose of transfer of securities held in the beneficiaries account for stock trade agreements and deliveries and settlement obligations.
2. For the pledging/ re-pledging of securities in favour of the trading member.
3.For limited purposes as specified in the guidelines.
This circular shall be applicable from November 01, 2020.
[SEBI Circular No. SEBI/HO/MIRSD/DOP/CIR/P/2020/158]
