The shareholders of financial investment companies (SIFs) will be the ones to issue decisions on the most important aspects of the status of SIF's, including the ceiling pertaining to participations. This is the conclusion of the draft instructions drawn up by the National Securities Commission (CNVM).

Discussions over the last two years with regard to the raising of the maximum threshold of stock holdings in SIFs, currently standing at 0.1%, have had a major impact on SIFs quotations on the bourse. Many brokers and investors have concluded that a possible lifting of the threshold would bring along more buyers of SIF stock and therefore higher prices.

The new law regarding the capital market forces SIF administrators to convene a General Meeting of Shareholders by the end of September, to modify the status of these companies in line with the new stipulations of the law. The CNVM also wants SIF shareholders to discuss issues that the law does not require to be modified. These include the limitation of stock holdings, the opportunity for SIFs to be managed by a management board or a specialised company, and the rules pertaining to possible preferential stock issues.

At present, the five financial investment companies are bound by a stipulation according to which no shareholder can own more than 0.1% of stock, a rule that has been criticised by many capital market investors. After initially planning to raise the holding ceiling to 1%, CNVM gave up on this idea, instead suggesting that such a decision could only be issued by the companies' shareholders.

In theory, depending on the decisions taken by shareholders, holding thresholds might be raised or even done away with altogether. However, in practice it will be very difficult for shareholders to make such changes.

"I do not think anything will chan