The appointee may be given several powers and rights, including the authority to sign documents on your behalf, handle your finances, or dispose of your property. Let us understand further the powers of a Power of Attorney.
What is a Power of Attorney?
A power of attorney is a legal agreement that gives the agent extensive ability to act on behalf of another person (principal). For example, depending on the rights granted, the appointee may sell your property, sign contracts on your behalf, manage your funds and exercise other legal rights.
Types of Power of Attorney
There are usually four types of Power of Attorney prevailing in the stock market, namely:
- General PoA: This power of attorney allows the agent to represent the principal in any situation as the law permits.
- Limited or Special PoA: With a limited or special power of attorney, the agent can make decisions or take certain actions on behalf of the principal.
- Durable PoA: Even if the principal loses mental capacity, the durable power of attorney (DPOA) continues to have authority over certain financial, property, or legal problems that are specifically included in the agreement.
- Medical PoA: When a principal faces a life-threatening illness, medical or healthcare power of attorney allows the agent to act on the principal’s behalf.
What can a Power of Attorney do?
The extent of the authorised agent’s legal/other decision-making authority regarding the property (a property POA) and other matters, including financial and medical matters, might vary depending on the terms of the Power of Attorney. Listed below are some things which are allowed and banned:
- Buying, selling, or renting a property.
- Supervise and manage the Bank Account.
- Payment of bills.
- Investment Management.
- Taking personal decisions on discretionary funds.
- Merging the principal’s and broker’s bank accounts.
- Misuse of powers granted by a PoA.
- Tax planning without approval and supervision of the principal.
Things to keep in mind while executing the PoA
- You must provide your Depository Participant with a notarised copy of a power of attorney.
- A POA must have the signatures of both parties, such as the Donor and the Donne.
- The POA holder must also finish the KYC procedures with the bank.
- The holder must sign the account opening paperwork if the POA is given when the Demat account is opened.
Can someone else operate my Demat account based on power of attorney on my behalf?
Yes, according to SEBI, the individual can manage the account on behalf of the BO (beneficiary owner) if the BO grants them the authority to sign a power of attorney and submit it to the depository participant.
As observed, the agent may be given either limited or unrestricted power to make decisions on the principal’s health, property, or finances on behalf of the principal. Visit Shoonya, the best brokerage firm in India, for trusted and promising zero-brokerage financial services.