Reps propose 20% cap on trust investments

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 Cor