The House of Representatives is considering a new investment restriction that would prevent trustees from committing more than 20 per cent of trust funds to a single issuer, in a proposed reform aimed at reducing investment risks and safeguarding beneficiaries’ assets.
The provision is part of the Trustee Investment Bill, 2026 (HB 2762), which seeks to replace the existing legislation, dating back to 1957, with a regulatory framework that reflects developments in Nigeria’s financial market.
Chairman of the House Committee on Capital Market and Institutions, Hon. Solomon T. Bob, disclosed the proposed restriction at a public hearing on the bill at the National Assembly in Abuja on Monday.
He explained that the diversification requirement was intended to address the dangers of concentrating trust investments in one institution or asset, noting that such exposure had contributed to the destruction of family estates.
He added that the proposed legislation also seeks to widen the range of investments available to trustees, covering corporate bonds, equities, exchange-traded funds, real estate investment trusts, infrastructure funds, real property, foreign investments through licensed custodians, private equity, regulated virtual assets and environmental, social and governance-compliant bonds.
The lawmaker said the existing law was enacted when investment options in Nigeria were largely restricted to Federal Government bonds, whereas the country’s financial market had since undergone considerable transformation.
He put the current value of the capital market at over N80 trillion, with pension assets exceeding N30 trillion, arguing that the country’s legal framework must evolve alongside the expansion of investment opportunities.
According to him, “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.”
Beyond expanding investment options, the bill proposes clearer obligations for trustees, including loyalty, prudence, care and impartiality. Under Clause 5, trustees would be required to manage assets with the same level of caution expected of prudent individuals handling their own affairs.
The proposed law also recognises the growing role of professional investment managers. Clause 6 allows trustees to delegate investment functions to fund managers and custodians but requires them to retain responsibility for selecting and supervising those professionals.
Other provisions seek to introduce fair valuation of trust assets and mandatory annual reporting to beneficiaries. The bill also prohibits speculative transactions, futures contracts and investments in unregulated schemes.
Under Clause 11, the Minister of Finance would be empowered to issue regulations in consultation with the Securities and Exchange Commission (SEC) and other relevant regulatory authorities.
Bob added that the committee wanted the views of institutions directly involved in the management and regulation of trust assets before finalising the proposed legislation.
He identified the Ministries of Finance and Justice, SEC, National Pension Commission, Debt Management Office, Nigeria Deposit Insurance Corporation, market operators, estate administrators and civil society organisations among the institutions invited to participate.
The committee chairman disclosed that eight memoranda had been received ahead of the hearing and asked stakeholders to examine whether the proposed investment categories were appropriate, whether the 20 per cent threshold was sufficient and whether riskier investments should attract lower limits.
He also sought recommendations on the possible inclusion of explicit environmental, social and governance obligations, the protection of small family trusts and large institutional funds, and potential conflicts with existing SEC and PenCom regulations.
Bob maintained that the proposed legislation must provide equal protection for beneficiaries, regardless of the value of the assets held on their behalf.
According to him, “I assure you this Committee will be fair, transparent and thorough. No interest is too small. The widow in Sokoto whose husband left N2 million in trust deserves the same protection as a billion-naira pension fund.”
However, the public hearing was marked by the absence of most of the institutions invited to contribute to the legislative process.
Bob expressed displeasure that only three of the approximately 12 invited institutions attended, describing their poor response as a failure to take the lawmaking process seriously.
The Securities and Exchange Commission, Debt Management Office and Association of Corporate Trustees were the only institutions that attended and made submissions on the bill.
The lawmaker stressed that legislative engagement was fundamental to advocacy and any effort aimed at improving the lives of Nigerians, warning that such initiatives would amount to “blowing hot air” without lawmaking at their centre.
He criticised the attitude of institutions that ignored the invitation, emphasising the importance of participating in the process through which policy proposals and reform ideas are translated into binding laws.
While declaring the public hearing open, the Speaker of the House of Representatives, Rt. Hon. Abbas Tajudeen, called for a balance between opening up investment opportunities and protecting the interests of beneficiaries.
The Speaker, who was represented by Hon. Dahiru Abubakar Sarki, representing Lafia/Obi Federal Constituency of Nasarawa State, said the existing legal framework had failed to keep pace with changes in the financial sector.
He described the management of trust funds as a responsibility that goes beyond financial administration, pointing to the need to protect inheritances, family wealth and assets belonging to charitable institutions.
According to him, “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.”
The Speaker warned that while excessive restrictions could deny beneficiaries opportunities to grow their assets, inadequate safeguards could expose them to reckless investment decisions.
According to him, “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 further cautioned that expanded investment powers must not become an excuse for speculation or disregard for the interests of beneficiaries.
According to him, “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 added that the reform could also support Nigeria’s economic development by providing a credible framework for mobilising long-term domestic capital for infrastructure, productive capacity and enterprise.
However, he insisted that the economic benefits of the reform must not undermine the security of trust beneficiaries.
He urged the committee to subject the proposed investment categories, diversification requirements, fiduciary responsibilities, professional delegation and regulatory oversight provisions to thorough scrutiny.
He said the legislation must be practical, enforceable and capable of addressing the country’s investment realities over the long term.
“Effective lawmaking requires more than good intentions. It demands rigorous scrutiny, informed debate and meaningful engagement with those who will implement the law and those whose interests it is intended to protect,” he said.
The Speaker assured stakeholders that their recommendations would receive due consideration, adding that the ultimate measure of the reform would be the confidence it generated, the assets it protected and the value it delivered to beneficiaries.
“Ultimately, the success of this reform should be measured not simply by the investment opportunities it creates, but by the confidence it inspires, the assets it protects and the lasting value it delivers to beneficiaries,” he said.
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