When you sign up for a trading and Demat account with a stockbroker, you will be required to sign a multitude of different documents. One among them is the Power of Attorney. This particular document gives your stockbroker the power to access your Demat account and debit shares from it in the case of a sale. But what if you don’t issue one? How do you sell the shares in your Demat account then? Continue reading to find out.
What is a Power of Attorney?
A power of attorney (POA) is a document that provides another person with the power to make decisions and take actions on behalf of the person who signs the document. The specific powers granted in a POA can vary widely, but they typically include the ability to manage financial affairs, make healthcare decisions, and sign legal documents. There are different types of POAs, including revocable and non-revocable POAs, and specific POAs for healthcare and finances.
Why Do Stockbrokers Demand a Power of Attorney When Signing Up?
Stockbrokers often demand a Power of Attorney (POA) when you sign up for a trading and Demat account. One of the many reasons why they get a signed POA from you is because it gives them the legal authority to make trades and other transactions on your behalf. Without a Power of Attorney, however, the stockbroker would not have the authority to buy and sell stocks, bonds, and other securities on your behalf, which can lead to unnecessary issues while trading.
That’s not all. A POA also allows the stockbroker to access your account information, including your account balance and transaction history. Access to such information is necessary for the broker to make informed decisions about your investments, especially if you’ve availed of their stock advisory or wealth management services.
Additionally, a Power of Attorney also allows the broker to communicate with your bank and other financial institutions on your behalf to transfer funds into and out of your trading account. Finally, it's also worth mentioning that you can revoke the POA that you issued to your stockbroker at any point in time if you feel that your assets are not safe and secure.
Is it Mandatory for Investors to Provide their Stockbroker with a Power of Attorney?
No. You don’t need to provide your stockbroker with a signed Power of Attorney at the time of signing up for your trading and Demat account. It is well within your rights to refuse to give them a POA. However, your stockbroker cannot force you to sign one to open a trading or Demat account.
But then, if you don’t provide a POA to your stockbroker, you will have to handle your trades and account management on your own. However, if you wish to ensure a seamless trading experience where you can buy or sell stocks without any hassles or going through additional steps to complete the transaction, it is advisable to provide your stockbroker with a Power of Attorney.
How to Sell Stocks From Your Trading Account without a Power of Attorney?
A Power of Attorney makes it easy to buy and sell shares in the stock market. When you buy shares, they’re delivered directly to your Demat account. Similarly, when you sell shares, your stockbroker accesses and transfers the sold shares out of your Demat account.
Now, let’s say that you don’t provide your stockbroker with a POA. In this case, while you won’t face any issues buying shares, selling them might become cumbersome since you haven’t authorized your stockbroker to access your Demat account and transfer the sold shares out of it.
So, what would happen in this case? How then do you sell stocks from your trading account without a POA?
Fortunately, there are two different ways through which you can complete the sale transaction without a Power of Attorney. Here’s how.
Using the e-Delivery Instruction Slip (e-DIS) Method
When you sell shares that are in your Demat account through your stockbroker’s trading portal without a POA, you will have to authorize the debit every single time by entering a T-PIN (in the case of CDSL) or M-PIN (in the case of NSDL). Here’s a general overview of the steps that you will have to follow to use the e-DIS method.
- Step 1: Log into your stockbroker’s trading portal.
- Step 2: Proceed to place a sell order for the shares that you would like to sell.
- Step 3: Once the order is executed, head to the holdings section of your trading portal.
- Step 4: Since you haven’t submitted your POA to the broker, you will see something called ‘Authorisations’.
- Step 5: Click on the sell order that was executed. The portal should display an e-DIS authorization message.
- Step 6: You will be asked to enter a T-PIN or M-PIN, depending on the depository with whom you have your Demat account, to authorize your stockbroker to debit the shares from your account.
- Step 7: If you don’t have a T-PIN or an M-PIN, you can proceed to generate one from the trading portal itself.
- Step 8: Enter the PIN in the relevant field and proceed to complete the authorization.
Using the Manual Delivery Instruction Slip (DIS) Method
If you don’t have access to the internet or prefer to do it offline, here are the steps that you will have to follow.
- Step 1: Request your stockbroker to provide you with a manual Delivery Instruction Slip (DIS) booklet.
- Step 2: Proceed to sell the shares in your Demat account through your stockbroker’s trading portal.
- Step 3: Once the sale is complete, proceed to fill in the trade details in a Delivery Instruction Slip.
- Step 4: Check the entered details once again and sign the DIS.
- Step 5: Send the signed DIS to your stockbroker. Once they receive it, the shares that you sold will be debited from your Demat account.
Conclusion
As you can see, authorizing the debit of shares from your Demat account each time you sell shares can get very cumbersome; especially if you’re someone who conducts plenty of trades in a day. Issuing a Power of Attorney to your stockbroker, however, can eliminate the need to authorize your stockbroker for every single sell order that you execute.
However, if you’re someone who is concerned about the misuse of POA by stockbrokers or prefers to handle your trades and account management on your own, you can consider not issuing one in the first place.
Now, if you’re someone who doesn’t have a trading or Demat account, but wants to open one, visit the website of Motilal Oswal right away. You can quickly and easily open a Demat account and a trading account through an entirely paperless process. With a Motilal Oswal trading account, you can invest in stocks, upcoming IPOs, mutual funds, and even commodities and currencies.
Popular Stocks: ONGC Share Price | SBI Life Share Price | UPL Share Price | TCS Share Price | Titan Share Price