The House of Representatives has proposed limiting trustees’ investments in a single issuer to 20 per cent of a trust fund’s portfolio to scale back publicity to monetary dangers and protect beneficiaries’ property.
The proposal is contained within the Trustee Investment Bill, 2026 (HB 2762), which seeks to change the prevailing Trustee Investment Act of 1957 with a contemporary authorized framework for managing trust property.
The invoice additionally proposes increasing the vary of economic devices trustees can spend money on, introducing stricter fiduciary obligations, and strengthening reporting and regulatory oversight.
Chairman of the House Committee on Capital Market and Institutions, Solomon Bob (APC, Rivers), disclosed the proposed investment restrict on Monday at a public listening to on the invoice on the National Assembly in Abuja.
Mr Bob stated the proposed 20 per cent threshold, supplied beneath Clause 4, was meant to forestall trustees from concentrating a considerable portion of beneficiaries’ property in a single establishment or investment.
He defined that the reform had turn out to be mandatory as a result of the prevailing regulation was enacted in 1957, when Nigeria’s monetary system was much less developed and investment alternatives have been restricted.
According to him, Nigeria now has a capital market valued at over N80 trillion, pension property exceeding N30 trillion and a number of other investment devices that weren’t out there when the prevailing laws was launched.
“Today, we have a sophisticated capital market worth over N80 trillion, pension assets over N30 trillion, and new asset classes from REITs to Infrastructure Funds to Green Bonds. The world has moved. Our law has not. This hearing is to correct that,” he stated.
Under Clause 3, the proposed laws seeks to broaden the investment choices out there to trustees to embrace company bonds, equities, collective investment schemes, Exchange Traded Funds (ETFs), Real Estate Investment Trusts (REITs), infrastructure funds and actual property.
It additionally supplies for international investments via licensed custodians, non-public fairness, regulated digital property and environmental, social and governance (ESG)-compliant bonds.
Mr Bob stated the expanded investment choices would allow trustees to diversify their portfolios and pursue higher returns whereas managing dangers related to trust property.
Proposed safeguards for trustees
Beyond increasing investment alternatives, the invoice seeks to impose clearer obligations on trustees to make sure that their selections prioritise beneficiaries.
Clause 5 supplies for the incorporation of fiduciary rules, together with loyalty, prudence, care and impartiality, into the authorized tasks of trustees.
The provision would require trustees to train affordable care and prudence in managing entrusted property and make sure that their private pursuits don’t override these of beneficiaries.
The invoice additionally proposes permitting trustees to delegate investment tasks to professionals, together with fund managers and custodians, beneath Clause 6.
However, such delegation wouldn’t absolve trustees of accountability, as they’d stay accountable for choosing, supervising and monitoring the professionals managing the property.
To strengthen transparency, Clauses 7 and eight propose necessities for the honest valuation of trust property and annual reporting to beneficiaries.
The provisions are meant to give beneficiaries entry to details about the worth, administration and efficiency of property held on their behalf.
Meanwhile, Clause 10 seeks to prohibit speculative transactions, futures contracts and investments in unregulated schemes.
Clause 11 additionally proposes empowering the Minister of Finance, in session with the Securities and Exchange Commission (SEC) and different related regulators, to concern rules for implementing the regulation.
Mr Bob stated this is able to enable the regulatory framework to accommodate rising monetary merchandise and developments with out requiring repeated amendments to the laws.
Committee laments poor attendance at listening to
Despite the intensive consultations deliberate for the train, Mr Bob expressed disappointment over the poor attendance of establishments invited to contribute to the proposed laws.
He stated solely three of the roughly 12 establishments invited to the general public listening to attended, describing their absence as an indication that some authorities companies and related organisations weren’t taking the legislative course of critically.
The Securities and Exchange Commission, Debt Management Office (DMO) and Association of Corporate Trustees have been the establishments represented on the listening to. They made submissions and supplied suggestions on the proposed laws.
Other invited establishments included the Ministries of Justice and Finance, the National Pension Commission, the Nigeria Deposit Insurance Corporation, and representatives of economic market operators, property directors, and civil society organisations.
Mr Bob stated the committee had obtained eight memoranda earlier than the listening to however anticipated additional contributions from stakeholders.
He famous that the participation of the invited establishments was significantly vital as a result of their experience would assist determine potential conflicts between the proposed regulation and current rules governing the monetary sector.
He particularly recognized the SEC as central to the method as a result of the invoice proposes it because the host regulator beneath Clauses 2(2) and 11.
The National Pension Commission was additionally anticipated to present technical enter on pension property, whereas the DMO and Nigeria Deposit Insurance Corporation have been anticipated to contribute views on public debt and monetary stability.
The committee chairman urged stakeholders to look at whether or not the proposed 20 per cent investment restrict was acceptable and whether or not decrease thresholds ought to apply to higher-risk investment classes.
Speaker seeks stability between investment returns and safety
In his remarks, Speaker of the House of Representatives, Abbas Tajudeen, referred to as for a complete overview of the authorized framework governing trustee investments, describing the prevailing laws as insufficient for Nigeria’s evolving monetary market.
Mr Tajudeen, represented by Abubakar Sarki (APC, Nasarawa), stated the emergence of recent monetary devices and investment alternatives had made the 1957 regulation more and more outdated.
He described the proposed laws as a chance to set up a framework that might accommodate trendy investment practices whereas defending the pursuits of people and establishments whose property are held in trust.
According to the Speaker, trustee investment is just not merely a monetary accountability; it additionally includes defending inheritances, preserving household wealth, and safeguarding the sources of charitable organisations.
“Behind every trust may be the inheritance of a child, the security of a widow, the resources of a charitable institution or the accumulated wealth of a family. The law must ensure that these interests are adequately protected,” he stated.
He cautioned, nonetheless, that the proposed reform should stability the necessity to protect trust property with the chance to generate affordable returns.
READ ALSO: NASS Roundup: Rising school fees, insecurity, poor telecom network, other stories from House of Reps
Mr Tajudeen warned that overly restrictive investment guidelines might deny beneficiaries alternatives to develop their property, whereas weak rules might expose them to reckless investment selections and avoidable losses.
“The challenge is to strike the right balance between preserving trust assets and enabling reasonable returns on investment. An excessively restrictive framework may deny beneficiaries legitimate opportunities for growth, while an inadequately regulated one may expose their assets to imprudent decisions and avoidable risks,” he stated.
He maintained that increasing investment alternatives should go hand in hand with stronger safeguards, efficient threat administration and clearly outlined tasks for trustees.
“The governing principle must remain unmistakable: trustees hold assets for the benefit of others, not for their personal advantage. Their decisions must therefore be guided by prudence, integrity, transparency and an overriding commitment to the interests of beneficiaries,” he stated.
He additional warned that modernising the investment framework should not create room for speculative actions or expose trust property to unreasonable dangers.
The Speaker additionally highlighted the potential financial advantages of reforming the trustee investment framework, significantly its capability to mobilise long-term home capital for infrastructure and enterprise growth.
He stated Nigeria wanted substantial long-term financing to handle its infrastructure deficit, broaden productive capability and stimulate financial actions.
According to him, a reputable system for managing trust investments might deepen the capital market and enhance the mobilisation of home sources.
However, he pressured that these financial goals should not undermine the monetary safety and rights of beneficiaries.
“Nigeria needs substantial long-term capital to address its infrastructure deficit, expand productive capacity and stimulate enterprise. A credible framework for managing trust investments can deepen capital markets and more effectively mobilise domestic resources. But this economic objective must always be pursued without compromising the rights and security of beneficiaries,” he stated.
Mr Tajudeen urged contributors on the listening to to scrutinise the proposed investment classes, diversification limits, fiduciary obligations, skilled delegation and regulatory oversight.
He stated the committee ought to produce laws that was sensible, enforceable and able to responding to future developments within the monetary sector.
Discover extra from Premium Times Nigeria
Subscribe to get the most recent posts despatched to your e-mail.
