The Nigerian House of Representatives has proposed a 20% investment cap for trustees in a single issuer to reduce exposure to financial risks and protect beneficiaries' assets. This proposal is part of the Trustee Investment Bill, 2026 (HB 2762), which aims to replace the existing Trustee Investment Act of 1957 with a modern legal framework for managing trust assets. The bill seeks to update the law to reflect Nigeria's current financial system.
The proposed legislation, according to Chairman of the House Committee on Capital Market and Institutions, Solomon Bob, would prevent trustees from concentrating a substantial portion of beneficiaries' assets in one institution or investment. The 20% threshold, provided under Clause 4, is intended to promote diversification and minimize risks. Mr. Bob noted that the existing law was enacted in 1957, when Nigeria's financial system was less developed and investment opportunities were limited.
The Trustee Investment Bill, 2026, also proposes expanding the range of financial instruments trustees can invest in. Under Clause 3, trustees can invest in corporate bonds, equities, collective investment schemes, Exchange Traded Funds (ETFs), Real Estate Investment Trusts (REITs), infrastructure funds, and real property. Additionally, the bill allows for foreign investments through licensed custodians, private equity, regulated virtual assets, and environmental, social, and governance (ESG)-compliant bonds.
The proposed legislation seeks to impose clearer obligations on trustees to prioritize beneficiaries' interests. Clause 5 provides for the incorporation of fiduciary principles, including loyalty, prudence, care, and impartiality, into the legal responsibilities of trustees. Trustees would be required to exercise reasonable care and prudence in managing entrusted assets and ensure that their personal interests do not override those of beneficiaries.
To strengthen transparency, Clauses 7 and 8 propose requirements for the fair valuation of trust assets and annual reporting to beneficiaries. The provisions aim to give beneficiaries access to information about the value, management, and performance of assets held on their behalf. The bill also proposes allowing trustees to delegate investment responsibilities to professionals, including fund managers and custodians, under Clause 6.
Despite the extensive consultations planned, the committee lamented the poor attendance at the public hearing. Only three of the approximately 12 institutions invited attended, including the Securities and Exchange Commission, Debt Management Office (DMO), and Association of Corporate Trustees. The committee chairman, Solomon Bob, expressed disappointment, describing their absence as a sign that some government agencies and relevant organizations were not taking the legislative process seriously.
The Speaker of the House of Representatives, Abbas Tajudeen, called for a comprehensive review of the legal framework governing trustee investments, describing the existing legislation as inadequate for Nigeria's evolving financial market. The proposed legislation is an opportunity to establish a framework that would accommodate modern investment practices while protecting the interests of individuals and institutions whose assets are held in trust. The bill's passage would ensure that trustee investments prioritize beneficiaries' interests and adapt to Nigeria's sophisticated capital market.
Key points
- The proposed 20% investment limit aims to mitigate financial risks and safeguard beneficiaries' assets.
- The Trustee Investment Bill, 2026, seeks to update the existing law to reflect Nigeria's current financial system and promote diversification.
- The proposed legislation would impose clearer obligations on trustees to prioritize beneficiaries' interests and strengthen transparency in trust asset management.
