Reps propose 20% investment cap to protect trust fund beneficiaries
Nigeria’s House of Representatives wants to limit trustees to investing no more than a fifth of trust assets in any one venture.
According to Premium Times, the House of Representatives has drafted a bill that would cap the amount trustees can invest in any single investment at 20 percent of a trust’s total assets. The proposal aims to mitigate risk for beneficiaries of trust funds across the country.
The bill also seeks to strengthen oversight of trustees, requiring them to report investment decisions and adhere to stricter fiduciary standards. Lawmakers argue the measure will prevent loss of capital that could jeopardise beneficiaries’ future income.
Why it matters to your business
For founders, the cap means that trusts holding equity in start‑ups may limit their exposure. This could affect the amount of capital available from family trusts or employee benefit schemes that invest in private companies.
The move also signals tighter regulator scrutiny of investment practices. Companies that rely on trust‑fund capital should be prepared for more documentation and compliance checks.
What to do on Monday
- Review any trust‑fund investors in your cap table to ensure they are not exceeding the 20 % limit.
- Prepare to provide detailed reports on how trust capital is being used, in line with the proposed fiduciary rules.
- Consult legal counsel now to understand how the bill could impact existing investment agreements and to draft any needed amendments.
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Sources
Also reported by Premium Times Nigeria, Vanguard News, Galaxy Television, The Nation Newspaper.