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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Opening

Mr. Arvind Shah is opening a demat account and also wants to authorise his friend to operate it. Which statement about a Power of Attorney (POA) granted to the friend is correct?

A POA lets the appointed person operate the demat account within the powers given, but the account holder remains the beneficial owner of the securities. Ownership, and the holder's PAN, do not pass to the POA holder merely because authority to operate is delegated.

  1. AThe POA holder becomes the beneficial owner of the securities in the account
  2. BThe beneficial owner remains the account holder, while the POA holder may operate the account within the authority grantedCorrect
  3. CThe POA automatically transfers the PAN of the account holder to the POA holder
  4. DA POA is not permitted for any demat account

Explanation

A POA only authorises the holder to operate the account on behalf of the client. Beneficial ownership stays with the account holder. Ownership does not pass and PAN is not transferred.

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