Special power of attorney
Also written Specific power of attorney · Specific PoA
A power of attorney that gives the agent only limited powers, such as carrying out one specific transaction. SEBI guidelines allow a specific PoA to a broker or DP, never a general one.
In plain language
A power of attorney lets someone else act for you. A special power of attorney lets them act for you only in a limited way.
The booklet (Chapter 7) puts it plainly: "a special power of attorney gives the agent limited powers, such as the power to accomplish a specific transaction." A general power of attorney, by contrast, lets the agent do "anything the principal could do".
The person giving the power is the principal. The person receiving it is the agent.
Think of it as handing over one key, not the whole bunch. If you are abroad and need someone to register a sale deed for you, a special PoA for that one sale does the job without letting them touch your bank account.
How it works
General versus special (Chapter 7):
| General power of attorney | Special power of attorney | |
|---|---|---|
| Powers | Anything the principal could do | Limited, e.g. a specific transaction |
| Risk if misused | Very high | Confined to what is written |
In the securities market (Chapter 5 and the securities-market booklet):
- A client may give a PoA to the stock broker or depository participant so they can operate the demat and bank account to deliver shares and handle pay-in and pay-out of funds.
- A specific Power of Attorney, as per SEBI guidelines, may be executed in favour of the broker or DP.
- It is not mandatory. Signing is "purely optional and voluntary", and you can revoke it at any point of time.
- If shares are moved from your account for any reason other than those you authorised under the PoA, take it up with the broker immediately; if there is no reply or it does not satisfy you, go to the depository or exchange.
The Do's and Don'ts say not to issue a general PoA to a broker or DP.
At account opening, the booklet asks you to give specific authorisation for facilities such as a running account and executing a PoA, "to avoid any dispute in the future".
A worked example
Names, amounts and dates are illustrative.
Outside the market. Deepa works in Dubai. Her late father's flat in Kochi is being sold for Rs 48,00,000 and she cannot fly home for the registration. She gives her cousin Arun a special power of attorney to sign and register this one sale deed. Arun cannot use it to withdraw from Deepa's bank account or sell her other property. Once the sale is registered, the power has done its job.
In the market. Deepa's demat account holds shares worth Rs 6,50,000. Her broker's kit offers a PoA so that shares she sells can be delivered without a separate instruction each time. She signs a specific PoA limited to delivering shares against sales she makes and to pay-in and pay-out of funds.
Three months later an SMS shows 150 shares leaving her account. She sold nothing. Because her PoA covers only settlement of her own trades, this transfer is outside what she authorised. She complains to the broker the same day, and when no satisfactory reply comes, she takes it to the depository.
She also remembers she can revoke the PoA at any time, and does so.
Why NISM asks about it
Chapter 7 (Pension, Retirement and Estate Planning) defines general and special power of attorney, with principal and agent. Chapter 5 (Investment in Securities Market) and the securities-market booklet say a specific PoA may be given to a broker or DP, that it is optional, and that it is revocable. Expect: "a power of attorney limited to a specific transaction is called?" and "is a PoA mandatory to trade?" (no).
Common exam traps
- Special (specific) = limited powers; general = anything the principal could do.
- Give a broker or DP a specific PoA, never a general one.
- No PoA is mandatory for trading or holding a demat account; it is optional and voluntary.
- It can be revoked at any time.
- The principal grants; the agent acts. Do not reverse the roles.
- Transfers outside what you authorised are a complaint to the broker first, then the depository or exchange.
Where this is taught
- Series X-B · Chapter 15: Tools for Estate Planningintroduced here
- Series SEBI-ICE · Chapter 7: Pension, Retirement and Estate Planningintroduced here
Related terms
- Power of AttorneyA legal document by which you authorise somebody else — often your stock broker or depository participant — to operate your demat and bank account on your behalf. It is optional, and revocable.
- Estate planningDeciding during your lifetime who is to receive which of your assets after your death, and documenting it — mainly through a Will and nominations — so heirs can claim them easily and cheaply.
- General power of attorneyA power of attorney that lets the agent do anything the principal could do. The booklets warn never to give one to your stock broker or depository participant; give a specific one instead.
- NomineeThe person you name to receive custody of your money or securities when you die — a custodian who must pass the asset to the legal heirs, not the owner of it.
- WillA written legal declaration of how a person wants their assets distributed after death. Registration is not compulsory but preferable; without a Will, assets pass under personal laws.