By Gift Chapi Odekina, Abuja
The House of Representatives has proposed a 20 per cent investment limit on exposure to a single issuer as part of efforts to strengthen the management of trust funds and protect beneficiaries against financial losses.
The proposal is contained in the Trustee Investment Bill, 2026 (HB 2762), which seeks to repeal and re-enact the existing Trustee Investments Act of 1957, expand permissible investment opportunities and introduce safeguards against excessive investment risks.
Chairman of the House Committee on Capital Market and Institutions, Solomon Bob, disclosed this on Monday at a public hearing on the bill at the National Assembly, Abuja.
Bob described the proposed diversification requirement as a critical measure to prevent excessive concentration of trust assets in one investment.
He said the existing law was enacted when Nigeria’s financial system was considerably less developed and investment opportunities were limited.
According to him, the country’s financial landscape has changed significantly, with the capital market now valued at over N80 trillion, pension assets exceeding N30 trillion and emerging investment opportunities including Real Estate Investment Trusts (REITs), infrastructure funds and green bonds.
“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 said.
Bob said the proposed legislation was designed to align the legal framework governing trust investments with contemporary financial realities while ensuring that trustees operated within clearly defined investment and accountability standards.
Under Clause 3 of the bill, the investment options available to trustees would be expanded to include corporate bonds, equities, collective investment schemes, including Exchange Traded Funds (ETFs) and REITs, infrastructure funds, real property, foreign investments through licensed custodians, private equity, regulated virtual assets and environmental, social and governance (ESG)-compliant bonds.
He said the expanded investment options would allow trustees to diversify portfolios and potentially improve returns for beneficiaries.
However, Bob explained that the proposed 20 per cent limit on investment in a single issuer under Clause 4 was intended to minimise concentration risk and prevent trust portfolios from being excessively exposed to the financial difficulties of one institution.
The bill also seeks to strengthen trustees’ fiduciary obligations through Clause 5 by expressly incorporating the principles of loyalty, prudence, care and impartiality.
Under the proposed provision, trustees would be required to exercise the level of prudence expected of individuals managing their own financial affairs, while prioritising the interests of beneficiaries.
Bob said Clause 6 would allow trustees to delegate certain investment responsibilities to professionals, including fund managers and custodians, while retaining responsibility for their selection, supervision and performance.
He said the provision was intended to accommodate the growing complexity of financial markets and enable trustees to benefit from specialised investment expertise without weakening accountability.
On transparency, he said Clauses 7 and 8 would introduce requirements for fair valuation of trust assets and annual reporting to beneficiaries.
The proposed legislation also seeks to prohibit speculative dealings, futures contracts and investments in unregulated schemes under Clause 10.
In addition, Clause 11 would empower the Minister of Finance, in consultation with the Securities and Exchange Commission (SEC) and other relevant regulatory authorities, to make regulations for the implementation of the Act.
Bob said the provision would enable the regulatory framework to respond to developments in the financial market without requiring repeated amendments to the law whenever new investment products emerged.
Agencies shun public hearing
The committee chairman expressed displeasure over the poor attendance of government agencies and other institutions invited to the public hearing.
He said only three of the approximately 12 institutions invited attended the session, describing their absence as a failure to take the lawmaking process seriously.
The institutions present were the SEC, Debt Management Office (DMO) and Association of Corporate Trustees. They made submissions and offered recommendations on the proposed legislation.
Bob said the committee had deliberately invited institutions involved in the management, regulation and advocacy of trust assets to ensure that the proposed law reflected the realities of those expected to implement it and the interests of beneficiaries.
Other institutions invited included the Ministries of Justice and Finance, National Pension Commission, Nigeria Deposit Insurance Corporation, financial market operators, estate administrators and civil society organisations.
He identified the SEC as particularly important to the process because the bill proposed it as the host regulator under Clauses 2(2) and 11.
He added that the National Pension Commission would provide perspectives on pension assets, while the DMO and NDIC would contribute their expertise on public debt and financial stability.
Bob disclosed that the committee had received eight memoranda ahead of the hearing, expressing the expectation that more submissions would be made by stakeholders.
He urged participants to address the proposed expansion of investment categories, the 20 per cent diversification threshold and whether lower limits should apply to higher-risk assets.
The committee also sought recommendations on the adequacy of the proposed fiduciary obligations, whether trustees should have an explicit ESG duty, and how the law could distinguish between the protection needs of small family trusts and large institutional trusts.
Participants were also asked to identify possible conflicts between the proposed legislation and existing SEC and PenCom regulations.
Bob assured stakeholders that the committee would consider all submissions objectively, stressing that ordinary beneficiaries deserved the same protection as large institutional investors.
“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 same protection as billion-naira pension fund,” he said.
He lamented that the absence of most invited institutions undermined the opportunity for their technical input, adding that lawmaking remained central to efforts to translate advocacy and policy proposals into lasting reforms.
Abbas seeks stronger safeguards
In his remarks, Speaker of the House, Tajudeen Abbas, called for a comprehensive overhaul of Nigeria’s trustee investment framework, describing the existing law as outdated and inadequate to address developments in the country’s financial and capital markets.
Abbas, represented by a member representing Lafia/Obi Federal Constituency of Nasarawa State, Dahiru Abubakar Sarki, said the proposed legislation offered an opportunity to establish a modern framework that would accommodate contemporary investment opportunities while protecting trust assets and beneficiaries.
He said the management of trust funds involved responsibilities beyond financial management, including the protection of property, preservation of family wealth and security of individuals and institutions whose interests depended on the prudent management of entrusted assets.
“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 said.
The Speaker cautioned that the proposed reform must strike a balance between protecting trust assets and allowing trustees to generate reasonable returns for beneficiaries.
He warned that an excessively restrictive framework could deny beneficiaries legitimate opportunities for wealth creation, while inadequate regulation could expose their assets to imprudent investment decisions and avoidable risks.
Abbas said increased investment flexibility must be accompanied by stronger safeguards, clearly defined fiduciary responsibilities, effective risk management and appropriate regulatory oversight.
He emphasised that trustees must remain accountable to beneficiaries and should not use expanded investment opportunities to justify reckless financial decisions.
“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 said.
He added that modernisation must not become a licence for speculation or expose trust property to unreasonable risks.
Beyond protecting beneficiaries, Abbas said the proposed reform could support Nigeria’s economic development by mobilising long-term domestic capital for infrastructure, productive capacity and enterprise growth.
He, however, insisted that the economic benefits of the legislation must not come at the expense of beneficiaries’ rights and financial security.
The Speaker urged stakeholders to bring their professional experience and technical knowledge to bear on issues including investment categories, diversification requirements, fiduciary obligations, professional delegation, regulatory oversight and beneficiary protection.
He said the objective should be to produce legislation that was contemporary, practical, enforceable and capable of standing the test of time.
Abbas reaffirmed the commitment of the 10th House of Representatives to reforming Nigeria’s legal and institutional framework to support national development, noting that effective lawmaking required rigorous scrutiny, informed debate and meaningful engagement with stakeholders.
He commended the bill’s sponsor and the Committee on Capital Market and Institutions for advancing the legislative process, assuring participants that their submissions and recommendations would receive due consideration.
According to him, the success of the reform should be measured not only by the investment opportunities it creates but also by the confidence it inspires, the assets it protects and the lasting value it delivers to beneficiaries.
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