Introduction
The corporate trustee is no longer a fringe player or mere passive custodian of assets and back-office technocrat. In today’s fast-evolving investing landscape, driven by regulatory evolution (Nigeria’s Investment and Securities Act 2025 being the case in point), technological breakthroughs in digital assets, increasing expectations of investor protection, and expanding ESG/stewardship needs, corporate trustees find themselves at the center of market integrity, investor confidence and product innovation. To continue to be relevant therefore, Corporate trustees must, in addition to their fiduciary discipline and operating ability (custody, valuation, governance, compliance) combine risk management, and active stewardship to generate value at all stages of the investment life cycle. The analysis that follows sets out the modern trustee’s legal duties, functional tasks, new domains of responsibility (digital assets, systemic risk reporting, tokenization), risks, and practical suggestions for Nigerian and other similar trustees’ jurisdictions.
Core legal and fiduciary responsibilities
Fiduciary duty is the trustee’s North Star: The one most important legal responsibility of a corporate trustee is to act in the best interest of beneficiaries. This involves loyalty, prudence, impartiality between or among beneficiaries, and strict avoidance or management of conflicts of interest. In Nigeria, the new Investment and Securities Act (ISA) 2025 and supporting SEC rules strengthen fiduciary expectations of custodians and trustees, increase reporting requirements, and extend regulator authority to sanction breaches, including criminal penalties for intentional misappropriation of client assets. This increases legal risk for trustees and the need for effective governance and tighter controls.
Traditional functions — executed to a higher standard today
Although Corporate trustees still perform established and mundane duties, the standards are substantially higher with improved legislation and clients expectations:
Safe custody and monitoring – It is the duty of Trustees to maintain adequate custody arrangements (segregation of assets, reconciliation, custody agreements). They are also expected to ensure custodians meet regulatory and contractual obligations. The ISA 2025 prescribes very strict liabilities for custodian and trustee where there is established negligence while at the same time, statutory indemnities have been cut back, and the trustees ensuring that the trustee relies on contractual protection and insurance.
Monitoring for compliance and governance – Since the trustees rely on executed Trust instruments to function effectively, they must ensure that fund managers and product issuers conform to trust deeds, prospectuses, regulatory disclosures and reporting schedules. Trustees must review large or related-party transactions, ensure issues of conflicts of interest are addressed, and ensure valuation and redemption policies are applied as enshrined in the instruments setting up the trust.
Fiduciary accounting and distributions – Trustees must ensure accurate Net Assets Value (NAV) calculation, ensure that distributions and or dividends are paid in accordance with the deed terms, and approve as well as monitor payment of performance fees and expenses.
Investor protection and reporting – Trustees act as independent protectors of unitholders/investors — reviewing prospectus materials, material event filing and periodic returns to the regulator and investors.
Why “higher standard” matters: regulators would like to see trustees on the front foot, not the back foot, not fringe players — flagging and escalating wrongdoings by Managers and Issuers of products, and at all times be able to demonstrate good record-keeping and audit trails as and when required.
New & expanding roles under ISA 2025 and recent SEC guidelines
By promulgating the ISA 2025, SEC has essentially modernized capital markets law in ways that materially affect trustee roles and deepening of the market for trust activities. A few of these issues highlighted below would suffice to deal with the impact of the new regulations on the trustee business:
Improved asset coverage (digital assets & tokenized instruments): ISA 2025 gives the SEC the authority to treat certain virtual and digital assets as securities, and enabling the trustees to now provide custody, monitoring, and trustee service for tokenized securities and related arrangements. SEC’s digital asset regulations (registration, VASPs and custodians’ custody requirements) require the trustees to adapt custody models and legal documentation to non-traditional/non-physical asset classes.
Higher reporting & systemic risk obligations: ISA and the rules made pursuant thereto allow the regulator to request portfolio, leverage and counterparty data, which may require trustees to provide information or validate manager reports. Considering this new requirement, Trustees would thus have to upgrade their MIS and data-governance systems to support responding to systemic-risk reporting.
Enforcement & accountability: ISA 2025 enhances liability for mismanagement or misappropriation and removes some indemnities in the past, imposing higher trustees’ need for explicit contractual cover, good insurance, and documentary evidence of monitoring activity. ‘’Trustees’ eyes must always be on the ball’’.
Digital assets, custody & tokenization — practical trustee responsibilities
Digital assets are the single largest operational adjustment for trustees. The everyday trustee must therefore review all existing contractual obligations and responsibilities particularly with respect to:
Legal & contractual clarity: changing trust deeds and custody arrangements to include how digital assets are held, who holds private keys, how proof-of-ownership is established, and what happens on insolvency or a cybersecurity event.
Custody models: select between internal qualified custody (if permitted/licensed) vs. co-location with SEC-permitted custodians/VASPs. Hybrid custody (off-chain reconciliation + on-chain proofing) is important. All these arrangements will be subject to segregation.
Operational controls & cyber resilience: multi-signature wallets, hardware security modules (HSMs), secure key-management policies, periodic penetration testing, and insurance cover for digital asset theft/operational losses.
Valuation and auditability: trustees must be informed/enlightened on the token valuation methods, market-depth limits, and audit trail (on-chain and off-chain) to validate NAVs and investor accounts.
Regulatory compliance: render KYC/AML, sanctions screening, and AML reporting virtual asset reality-compatible; coordinate with platform operators and exchanges on custody regulation and recovery options.
Risk management, controls & insurance
Trustees must operate a layered risk framework:
Policy layer: A documented trustee supervision policy for valuations, gate-offs upon redemptions, related-party transactions, and approvals (e.g., Investment Committee/Trustee approvals). Make trust deed language to enable operational practicalities (e.g., hybrid valuation methods via transition periods).
Operational controls: duties segregation, reconciliations, information technology access controls, third-party vendor due diligence, and business continuity planning.
Reporting & auditability: maintaining records to allow re-creating decisions and transactions (facilitating regulator audits and investor requests). Maintain independent auditors and conduct frequent compliance testing.
Insurance: fidelity bonds, professional indemnity and, more so, cyber/crypto asset insurance where relevant. ISA 2025 and SEC laws encourage open insurance coverage for operating risks.
Governance, conflicts of interest & related-party oversight
As gatekeepers for conflicts of interest, Trustees must always ensure:
approval of principal or related – party transactions: Trustees are to make sure that such transactions are arm’s length, on current market terms and fully disclosed. Fund managers under SEC rules are required to obtain trustee approval for specified parties related exposure and to disclose such transactions in periodic reports. Trustees should require evidence of best execution and market comparators. (please refer to the CIS related-party rules.)
Policy enforcement: Requires fund managers to maintain conflicts register, disclose affiliate transactions, and follow pre-approval processes. The trustees are required to report breaches or suspected abuse to the regulator.
Independence & board supervision: Trustees ought to document independence safeguards (e.g., no cross-shareholdings, rotation policies, revelation of interlocking directorships).
Stewardship, ESG and active oversight
Institutional investors and regulators increasingly expect trustees to play a stewardship role:
ESG integration: trustees should review whether fund managers incorporate ESG factors where relevant (particularly for long-term capital and pension mandates). This includes assessing whether ESG policies are implemented, conflicts are managed, and disclosures are accurate. Global stewardship principles (ICGN and others) provide a blueprint for trustees to demand appropriate stewardship reporting.
Proxy voting & engagement: where trustees are appointed in capacities that influence voting rights or governance, they should ensure policies exist and that manager actions are consistent with investor mandates and long-term value creation.
Key issues to be urgently addressed by the Trustees to be able to play in this new market:
Talent: Trustees must invest in talent. Hire crypto engineers, digital-asset operations staff, and ESG analysts. Employ, co-share or outrightly outsource.
Technology: custody platforms, reconciliation systems, secure key management, and regulator-ready reporting tools.
Legal & compliance capacity: to redraft trust deeds, custody agreements and ensure alignment with ISA 2025 and SEC guidance.
Insurance & forensic readiness: suitable fidelity, cyber and professional indemnity coverage; relationships with forensic auditors for incident response.
Challenges & mitigation.
Challenge: rapid tech innovation outpaced internal capacity.
Mitigation: strategic partnerships with regulated fintech and custodians; phased capability build.
Challenge: valuation uncertainty for illiquid or tokenized assets.
Mitigation: robust valuation policies, independent valuation providers, and transparent investor disclosure.
Challenge: reputational and legal exposure from manager misconduct.
Mitigation: active oversight, documented escalations, and contractual protections plus insurance.
Conclusion: Trustees as enablers of market trust and innovation
The modern corporate trustees are at the heart of deep, strong, and innovative capital markets. The regulator by promulgation of the ISA 2025 and SEC rulemaking, intends that trustees will be held to greater standards — not only for traditional custody and accounting but also for digital assets, systemic risk reporting, and stewardship. By investing in human capital, technology, modern operating practices, and governance, trustees will serve beneficiaries more efficiently, safely and thus create new lines of business as markets diversify and digitize. In brief: in view of the emerging and ever evolving market, trustees that combine rigorous fiduciary discipline with flexibility will be the market’s most trusted partners over the next decade.
This is another modest contribution on the topic by BUNKAYA GANA ESQ, MANAGING DIRECTOR/CE-GREENWICH TRUSTEES LIMITED. He can be reached on 08033335436 or bunkaya.gana@greenwichtrustees.com