HOUSE OF REPS BEGINS REVIEW OF 1957 TRUSTEE INVESTMENT LAW

By ‘Balogun Ibrahim

The House of Representatives has begun moves to repeal and re-enact Nigeria’s 69-year-old Trustee Investment Act to expand investment opportunities for trustees, strengthen protection for beneficiaries and bring the country’s trust investment framework in line with current financial market realities.

The proposed reform is contained in the Trustee Investment Act (Repeal and Enactment) Bill, 2026, which seeks to replace the existing law, enacted in 1957, with a more comprehensive framework that accommodates emerging investment instruments and establishes clearer responsibilities for individuals and institutions managing assets on behalf of others.

The bill was examined on Monday at a public hearing organised by the House Committee on Capital Market and Institutions in Abuja, where lawmakers, regulators and other stakeholders considered its provisions and potential impact on Nigeria’s investment sector.

Declaring the hearing open, Speaker of the House of Representatives, Tajudeen Abbas, said the existing legislation had become inadequate following decades of changes in the economy, financial markets and available investment opportunities.

Represented by Dahiru Sarki, Abbas said reviewing the law was important because trustee investment involved protecting assets belonging to individuals, families and institutions whose interests depended on responsible financial management.

He said, “The law governing the investment of trust funds carries a responsibility that extends beyond financial management. It concerns the protection of property, the preservation of family wealth and the security of those whose interests depend on the prudent management of assets entrusted to others.

“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.

“Nigeria’s Trustee Investments Act of 1957 was enacted in a substantially different economic and financial environment. Capital markets have expanded, financial instruments have become more sophisticated, and new opportunities for investment and wealth creation have emerged. Yet the legal framework governing trust investments has not kept pace with these developments. This makes reform both necessary and timely.”

The Speaker said the proposed legislation should balance the protection of trust assets with the need to give trustees sufficient flexibility to pursue reasonable investment returns.

He warned that excessive restrictions could prevent beneficiaries from benefiting from legitimate wealth-creation opportunities, while weak regulation could expose their assets to poor investment decisions and avoidable risks.

“A modern law must accommodate changing investment realities without weakening the fiduciary obligations of trustees. HB. 2762 seeks to achieve this balance by replacing an outdated framework with a more comprehensive regime for the investment of trust funds.

“Its proposed expansion of permissible investment opportunities reflects the realities of contemporary finance and the need for greater diversification. However, expanded investment freedom must be matched by strong safeguards, clear fiduciary responsibilities, effective risk management and appropriate regulatory oversight,” he said.

Abbas cautioned that the modernisation of the law must not encourage speculative investment practices or weaken trustees’ obligations.

He stressed that investment decisions must be guided by prudence, integrity and transparency, with the interests of beneficiaries remaining the priority.

“Their decisions must therefore be guided by prudence, integrity, transparency and an overriding commitment to the interests of beneficiaries. Modernisation must never become a licence for speculation or a justification for exposing trust property to unreasonable risks.

“The national significance of this reform is equally important. Nigeria needs substantial long-term capital to address its infrastructure deficit, expand productive capacity and stimulate enterprise,” he added.

He urged stakeholders to contribute to the legislative process, particularly on permissible investment categories, diversification requirements, fiduciary responsibilities, professional delegation, regulatory supervision and safeguards for beneficiaries.

According to him, the success of the proposed law should be determined not only by the investment opportunities it creates but also by its ability to build confidence, protect entrusted assets and deliver lasting benefits.

“The objective should be legislation that is not merely contemporary in its outlook but practical, enforceable and capable of standing the test of time,” he said.

Earlier, Chairman of the House Committee on Capital Market and Institutions, Solomon Bob, described the existing legislation as outdated, saying it no longer reflected the size and sophistication of Nigeria’s financial market.

“The world has moved but the Nigerian law has not,” Bob said.

He explained that the Trustee Investment Act, currently cited as Cap T22, Laws of the Federation of Nigeria 2004, was enacted when the investment options available to trustees were considerably more limited than those in the present financial market.

Bob noted that Nigeria now had a capital market valued at over N80tn, pension assets exceeding N30tn and a growing range of investment instruments, including Real Estate Investment Trusts, infrastructure funds and green bonds.

“Today, we gather to review a law that has governed trust investments in Nigeria since 1957 – 69 years ago. The Trustee Investment Act, Cap T22, LFN 2004, was made when Nigeria had only Federal Government 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. This hearing is to correct that,” he said.

Bob outlined the major provisions of the bill, explaining that it seeks to broaden the range of investments available to trustees while introducing measures to prevent excessive exposure and irresponsible management of trust funds.

Under Clause 3, the proposed legislation expands the list of permissible investments to include corporate bonds, equities, exchange-traded funds, Real Estate Investment Trusts, infrastructure funds, real property and foreign investments through licensed custodians.

Other proposed investment options include private equity, regulated virtual assets and environmental, social and governance-compliant bonds, reflecting the growing diversity of modern financial markets.

To reduce concentration risks, Clause 4 introduces diversification requirements, including a proposed 20 per cent limit on investments in a single issuer. The provision is intended to prevent trustees from committing an excessive proportion of trust assets to one investment.

Clause 5 seeks to establish trustees’ fiduciary obligations of loyalty, prudence, care and impartiality, requiring them to exercise sound judgment and prioritise beneficiaries’ interests.

The bill also provides for professional investment management. Under Clause 6, trustees would be allowed to delegate certain responsibilities to fund managers, custodians and other professionals while retaining responsibility for their selection, appointment and supervision.

Clauses 7 and 8 propose stronger transparency measures through fair valuation requirements and annual reports to beneficiaries. Meanwhile, Clause 10 seeks to restrict speculative transactions, futures contracts and investments in unregulated schemes.

Clause 11 empowers the Minister of Finance, in consultation with the Securities and Exchange Commission and other relevant regulatory authorities, to issue regulations required to implement the proposed law and accommodate developments in the financial market.

Bob said the committee invited 12 key institutions to participate in the hearing because of their roles in managing, regulating or advocating for trust assets.

He assured stakeholders that the committee would conduct a transparent and thorough review, maintaining that protecting beneficiaries, regardless of the size of their investments, would remain central to its work.

“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 billion-naira pension fund,” he said.

The public hearing also featured contributions from the Securities and Exchange Commission, the Debt Management Office and other stakeholders, who presented their views on the proposed reforms and their implications for the financial sector.

Trust investment laws generally determine how trustees can invest assets held for beneficiaries, including the level of risk they may assume and the responsibilities they owe those whose interests they represent.

Nigeria’s existing framework, introduced in 1957, has remained in place despite the emergence of new financial instruments and a more diversified investment market.

The proposed repeal and re-enactment is therefore aimed at addressing the gap between the current legal framework and the realities of modern investment management.

While the inclusion of emerging asset classes could provide trustees with more opportunities to diversify portfolios and improve returns, the proposed fiduciary, valuation and reporting requirements are designed to ensure that greater investment flexibility does not compromise beneficiaries’ interests.

The committee’s consideration of the bill will help determine how Nigeria balances investment innovation, responsible asset management and the protection of wealth held in trust.