Selling Shares Without Power of Attorney: The New Digital Era
Traditionally, sharing trading required a formal agreement known as Power of Attorney (POA). However, since June 2020, this has changed significantly. Shareholders no longer need to provide POA for selling shares. The Central Depository Services Limited (CDSL) provides a transaction password, often referred to as TPIN (Transaction Password Indicator Number), which serves as the security measure for transactions.
What is TPIN?
A TPIN is a unique and one-time transaction password provided by CDSL. It acts as a digital signature enabling you to perform share sales without human intervention. Unlike traditional methods, TPINs are valid for only one transaction, and this is sent to your registered mobile number with your designated holding (DP) Firm.
Why TPIN?
The shift to TPIN signifies a transition from manual processes to digital ones, streamlining the trade process and reducing the need for physical interventions. This change has simplified the selling process for individual investors, making it more secure and efficient.
How to Proceed Without POA?
If you do not have a TPIN, contact your broker immediately. They will guide you through the process and assist in obtaining TPIN for you. In today's digital landscape, all you need is TPIN and a one-time password (OTP) sent to your registered mobile number for each transaction.
Understanding the Historical Context of POA
Tracing back to the 'pre-digital' era, POA was a legal requirement. In those times, brokers handled all transactions, and customers needed to sign delivery instruction slips (DIS) to authorize brokers to sell their shares. This manual process was fraught with inefficiencies.
The introduction of digital technology transformed the landscape of share trading. Now, shareholders can sell shares online, rapidly and conveniently, directly to the market. While digital processes offer immense convenience, the need for a POA remains a controversial issue for many traders.
Is TPIN Valid for a Day?
Yes, TPIN is only valid for a single transaction. This ensures an additional layer of security, preventing unauthorized transactions and potential misuse. The OTP further enhances security, adding another verification step for each transaction.
What if Broker Misuses TPIN?
While there is no foolproof guarantee, the digital age has reduced the likelihood of misuse. However, it is always advisable to verify all transactions thoroughly. If you suspect any misuse, contact your broker or CDSL immediately to ensure the security of your investments.
Conclusion
The transition to TPIN simplifies the share selling process without the need for a POA. This shift is a testament to the evolving nature of digital finance. If you are uncomfortable with the current process or require a no-POA solution, you may need to explore other platforms or direct trading mechanisms. The future continues to offer innovative solutions, making share trading more accessible and secure for all investors.