Smart things to know: Power of attorney in mutual funds

1. Mutual fund investors can issue a power of attorney to a designated person in order to operate their folios and conduct transactions on their behalf.

2. Non-resident investors and senior citizens commonly use the power of attorney to enable their advisers, accountants or close relatives to operate their accounts.

3. The power of attorney can be granted only with the consent of all unit holders in a folio, and signing the prescribed format for the arrangement, which also has to be notarised.

4. The notarised power of attorney document, along with both sets of signatures (those of unit holders and holder of PoA), is to be submitted to the mutual fund, and used to verify the transaction.

5. The PoA holder may have only a limited set of powers as defined in the agreement. Besides, he cannot make or modify the nominations to a folio.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.)