Before 2018, investors in Nepal's stock market didn't complete EDIS after selling shares — instead, they signed a Power of Attorney (POA), handing brokers the authority to transfer shares from their Demat account. That changed when CDSC introduced the Electronic Delivery Instruction Slip (EDIS) system, putting control directly back in the investor's hands. Here's how the two systems compare, and why EDIS is considered safer for investors today.
What Was the POA System?
Under the old Power of Attorney (POA) system, investors signed a legal document authorizing their broker to move shares out of their Demat account whenever a sale was executed. This meant the broker held standing authority over the investor's holdings — convenient in some ways, but it also meant investors had less direct oversight over exactly when and how their shares were moved.
What Is EDIS and When Was It Introduced?
EDIS (Electronic Delivery Instruction Slip) was introduced by CDS and Clearing Limited (CDSC) starting from Asoj 21, 2075 (around October 2018) as a paperless alternative to POA. Instead of pre-authorizing a broker, investors now log into Mero Share after each sale and personally confirm the transfer through the "My EDIS" section — giving them direct, transaction-by-transaction control over their own shares.
Key Differences Between POA and EDIS
- Authority: POA gave brokers standing authority to transfer shares; EDIS requires the investor's active confirmation for every single sale.
- Control: EDIS puts the investor in direct control of when and how their shares move, reducing dependency on the broker.
- Safety: Since EDIS requires explicit investor action, it reduces the risk of unauthorized transfers that could occur under a standing POA arrangement.
- Process: POA was a one-time signed paper document; EDIS is a fully digital, per-transaction process done through Mero Share.
- Responsibility: With EDIS, the responsibility to complete the transfer on time now falls on the investor — which is also why the 20% closeout penalty exists if it's missed.
Why Did CDSC Move Away from POA?
As online trading through the Trading Management System (TMS) grew in Nepal, regulators recognized the need for a safer, investor-controlled process. EDIS was designed to eliminate reliance on brokers holding blanket transfer authority, aligning Nepal's market with global best practices around investor custody and control. It also enabled CDSC to later revise the EDIS system to properly account for WACC and capital gains tax rules based on holding duration — something a simple POA arrangement couldn't easily support.
The Trade-Off: More Control, More Responsibility
While EDIS gives investors more control and transparency, it also shifts responsibility onto them. Unlike the old POA system where the broker handled the transfer automatically, investors must now actively remember to complete WACC and EDIS confirmation after every sale — and missing the T+1 deadline results in a 20% closeout penalty. For a full breakdown of this process, see our guide: Mero Share WACC Calculation: Step-by-Step Guide.
Frequently Asked Questions (FAQ)
Is POA still used in Nepal's stock market?
EDIS is now the standard method for share transfer confirmation in Nepal, replacing the earlier reliance on POA for transaction-level transfers.
Do I need to sign anything physical to use EDIS?
No. EDIS is entirely digital and completed through the Mero Share website or app — no physical paperwork is required.
Why does CDSC want to move to Auto EDIS if EDIS already replaced POA?
While EDIS removed broker dependency, it still requires manual action from investors, which leads to missed deadlines and closeout penalties. Auto EDIS aims to solve this next layer of the problem by automating the process entirely. Learn more here: CDSC Auto EDIS: Sold Shares to Auto-Transfer.
Conclusion
Nepal's shift from POA to EDIS marked a major step toward giving investors direct, transparent control over their own shares. While it introduced new responsibilities — like remembering to complete WACC and EDIS on time — it significantly reduced the risks associated with brokers holding blanket transfer authority. And with Auto EDIS on the horizon, Nepal's share transfer system may be about to get even simpler.
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