The House of Representatives Committee on Capital Market and Institutions 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 from financial losses.
The proposal is contained in the Trustee Investment Bill 2026 (HB 2762) which seeks to repeal and re-enact the existing Trustee Investment Act with provisions expanding permissible investment opportunities while introducing stricter safeguards against excessive investment risks.
The Chairman of the Committee Hon. Solomon T. Bob disclosed this on Monday during the public hearing on the bill at the National Assembly Abuja describing the proposed diversification requirement as a critical measure to prevent excessive concentration of trust assets in one investment.
Bob said the existing Trustee Investment Act which dates back to 1957 was enacted when Nigeria’s financial system was considerably less developed and the country’s investment opportunities were limited.
He noted that the financial landscape had changed significantly with Nigeria now having a capital market valued at over N80 trillion pension assets exceeding N30 trillion and several 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.
According to him the proposed legislation is designed to bring the legal framework governing trust investments in line with contemporary financial realities while ensuring that trustees operate within clearly defined investment and accountability standards.
Under Clause 3 of the proposed bill the committee chairman said the investment universe would be expanded to accommodate 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 explained that the proposed expansion would provide trustees with a wider range of investment opportunities allowing them to diversify portfolios and potentially improve returns for beneficiaries.
However Bob said the proposed 20 per cent limit on investment in a single issuer under Clause 4 was intended to minimise concentration risk and prevent the exposure of entire trust portfolios to the financial difficulties of one institution.
The bill also seeks to strengthen the fiduciary obligations of trustees 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 same level of prudence expected of individuals managing their own financial affairs while prioritising the interests of beneficiaries.
The committee chairman further disclosed that 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 proposed arrangement was intended to accommodate the growing complexity of modern financial markets and enable trustees to benefit from specialised investment expertise without weakening accountability.
On transparency and accountability Bob said Clauses 7 and 8 would introduce requirements for fair valuation of trust assets and annual reporting to beneficiaries.
He explained that the provisions were designed to address possible abuses and ensure that beneficiaries had access to information about the management and performance of assets held on their behalf.
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 necessary for implementing the Act.
Bob said the provision would allow the legal framework to respond to emerging developments in the financial market without requiring the law to be repeatedly amended whenever new investment products emerge.
Explaining the importance of the public hearing the committee chairman said the committee deliberately invited 12 key institutions whose activities involve the management regulation and advocacy of trust assets.
The institutions included the Ministries of Justice and Finance the Securities and Exchange Commission the National Pension Commission the Debt Management Office the Nigeria Deposit Insurance Corporation as well as representatives of financial market operators estate administrators and civil society organisations.
He said their participation was necessary to ensure that the proposed law reflected the realities of the institutions expected to implement it and the interests of the individuals and organisations whose assets would be affected.
According to him the Securities and Exchange Commission was particularly important to the process because it was proposed as the host regulator under Clauses 2(2) and 11 of the bill.
He added that the National Pension Commission would provide perspectives on pension assets while the Debt Management Office and Nigeria Deposit Insurance Corporation would contribute their expertise on public debt and financial stability.
Market operators estate administrators and civil society organisations were also expected to provide technical and practical recommendations on the proposed investment framework.
Bob disclosed that the committee had received eight memoranda ahead of the public hearing expressing the expectation that additional submissions would be made by stakeholders during the engagement.
He urged participants to focus their presentations on the appropriateness of 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 stakeholders’ views on whether the proposed fiduciary obligations were sufficiently robust whether trustees should have an explicit environmental social and governance duty and how the law could distinguish between the protection needs of small family trusts and large institutional trusts.
Participants were equally asked to identify possible areas of conflict between the proposed legislation and existing regulations of the Securities and Exchange Commission and the National Pension Commission.
The chairman assured stakeholders that the committee would consider all submissions objectively stressing that the interests of ordinary beneficiaries must receive the same attention as those of 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 thanked the Speaker and leadership of the House members of the committee and its secretariat for their support in advancing the legislative process.
However Bob expressed displeasure over the poor attendance of government agencies and other institutions invited to a public hearing.
He lamented that only three of the approximately 12 institutions invited by the committee attended the public hearing accusing the absent institutions of failing to take the lawmaking process seriously.
The institutions that attended were the Securities and Exchange Commission (SEC) the Debt Management Office (DMO) and the Association of Corporate Trustees. They made submissions and offered recommendations towards the proposed legislation.
The committee chairman said he was disappointed that most of the invited institutions ignored the invitation despite the importance of their contributions to the legislative process.
He stressed that lawmaking remained central to any meaningful effort aimed at advancing advocacy introducing reforms and improving the lives of Nigerians.
According to him initiatives aimed at addressing national challenges and improving citizens’ welfare would amount to ‘blowing hot air’ if lawmaking was not placed at their centre.
Bob emphasised that relevant institutions must take legislative engagements seriously noting that the National Assembly provides the platform for translating policy ideas advocacy and reform proposals into laws capable of delivering lasting change.
The Speaker of the House of Representatives Rt. Hon. Abbas Tajudeen called for a comprehensive overhaul of Nigeria’s trustee investment legal framework describing the existing law as outdated and inadequate to address the realities of the country’s evolving financial and capital markets.
Abbas said the investment landscape had changed considerably since the enactment of Nigeria’s Trustee Investments Act of 1957 with the expansion of capital markets the emergence of sophisticated financial instruments and new opportunities for investment and wealth creation making a review of the legislation necessary.
The Speaker who was represented by Hon. Dahiru Abubakar Sarki representing Lafia/Obi Federal Constituency of Nasarawa State said the proposed legislation presented an opportunity to establish a modern legal framework that would accommodate contemporary investment opportunities while strengthening the protection of trust assets and the interests of beneficiaries.
According to him the law governing the investment of trust funds carries responsibilities that extend beyond financial management as it concerns the protection of property preservation of family wealth and the security of individuals and institutions whose interests depend 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.
Abbas observed that the existing legal framework had failed to keep pace with developments in the financial sector stressing that reform was both necessary and timely.
He however 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 investment framework could deny beneficiaries legitimate opportunities for wealth creation while inadequate regulation could expose their assets to imprudent investment decisions and avoidable risks.
‘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 said.
The Speaker said HB 2762 sought to address these concerns by replacing the existing framework with a more comprehensive regime for the investment of trust funds including an expansion of permissible investment opportunities to reflect contemporary financial realities and the need for greater diversification.
He nevertheless insisted that increased investment flexibility must be accompanied by stronger safeguards clearly defined fiduciary responsibilities effective risk management and appropriate regulatory oversight.
Abbas emphasised that trustees must remain accountable to the beneficiaries whose assets they manage warning against any attempt to use the proposed expansion of 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: ‘Modernisation must never become a licence for speculation or a justification for exposing trust property to unreasonable risks.’
Beyond protecting individual and institutional beneficiaries the Speaker said the proposed reform also had significant implications for Nigeria’s economic development particularly in mobilising long-term domestic capital for infrastructure development expansion of productive capacity and enterprise growth.
He noted that Nigeria required substantial long-term capital to address its infrastructure deficit and stimulate economic activities adding that a credible framework for managing trust investments could contribute to deeper capital markets and more effective mobilisation of domestic resources.
However he maintained that the economic benefits of the proposed legislation must not come at the expense of the rights and financial security of beneficiaries.
‘Nigeria needs substantial long-term capital to address its infrastructure deficit expand productive capacity and stimulate enterprise. A credible framework for managing trust investments can contribute to deeper capital markets and more effective mobilisation of domestic resources. But this economic objective must always be pursued without compromising the rights and security of beneficiaries’ he said.
Abbas urged stakeholders participating in the public hearing to bring their professional experience and technical knowledge to bear on the proposed legislation identifying investment categories diversification requirements fiduciary obligations professional delegation regulatory oversight and beneficiary protection as critical areas requiring the committee’s attention.
He said the objective should be to produce legislation that was contemporary in outlook practical enforceable and capable of standing the test of time.
The Speaker also 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.
‘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.
He commended the sponsor of the bill and the Committee on Capital Market and Institutions for advancing the legislative process assuring participants that their submissions and recommendations would receive the attention they deserved.
Abbas said the success of the proposed reform would ultimately depend on its ability to inspire confidence protect assets and deliver lasting value 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.