SEBI drafts norms on power of attorney execution by clients

By Leena Dagade, edited by Rachel Varghese/NewsWire18.

Securities and Exchange Board of India today invited views of market participants on the execution of power of attorney by clients favouring stock brokers and depositary participants. The regulator has invited comments by Nov 30 on the proposed guidelines, which have been framed as per the discussion between stock exchanges, depositories, brokers, investors, and deliberations with SEBI's Secondary Market Advisory Committee. Following are the proposed guidelines as detailed by SEBI on its website: . I) Proposed guidelines for execution of power of attorney by clients favouring stock brokers: 1. A specific PoA should be executed in favour of a stock broker to facilitate the following: a) Transfer of securities held in the beneficial owner account(s) of the client(s) for stock exchange related margin/delivery obligations arising out of trades executed by the client(s) on the stock exchange through the same stock broker. b) Transfer of funds from the bank account(s) of the clients for the limited purpose of meeting the settlement obligations of the client(s)/ margin requirements of the client(s) in connection with the trades executed by the clients on the stock exchange through the same stock broker. c) Identify/provide the particulars of the beneficial owner account(s) and the bank account(s) of the client(s) that the stock broker is entitled to operate. d) Transfer of securities to the clearing member pool account/client margin account of the stock broker only. . II) PoA favouring stock brokers and depository participants: 2. The PoA shall not be executed in the name of any employee or representative of the stock broker/depository participant, but only in the name of the concerned entity. 3. The PoA should be executed and stamped as per the rules/law prevailing in the place where the PoA is executed or the place where the PoA is kept as a record, as applicable. 4. The stock broker/depository participant will provide to the client(s) an original/a certified true copy of the PoA after execution. 5. The PoA shall authorise the stock broker/depository participant to send SMS alerts regarding broking transactions/debits to the beneficial owner accounts of the client. 6. The PoA should provide for a clause for settlement of disputes arising out of the operations of the PoA. Broking disputes will have to be settled under the bye-laws of the concerned stock exchange where the trades have been executed and depository-related issues under the bye-laws of the concerned depository, where the concerned beneficial owner demat account is held. 7. In case of merger/demerger of the stock broker/depository participant with another entity/into another entity, if the PoA does not provide the authority to continue the rights in favour of assignees, transferees, nominees, etc. of the stock broker/depository participant, the new stock broker/depository Participant will have to obtain a written confirmation from the client(s) to continue to use the PoA Copyright NewsWire18 Pvt. Ltd. 2007. All rights reserved.