Association of Corporate Trustees says organization to make capital market more robust

The Association of Corporate Trustees (ACT) has stated that the organization is positioned to create a more robust capital market, hinging on the adequate implementation of its fiduciary responsibility.

This was disclosed in the 2022 Business Luncheon organized by the organization in Lagos State, tagged; “An appraisal of the Nigerian Trust Industry vis-à-vis global trends in Trusteeship.”

According to Mrs. Olufunke Aiyepola, Managing Director/CE, UTL Trust Management Services Limited and one of the panellists during the conversation, corporate trustees serve as the third party who shoulder the will and monitors transactions in the capital market from the structuring stage to compliance and oversight.

She explained that the corporate trustee monitors and evaluates the capacity of the issuer to borrow and repay debt. Notably, the Trustee monitors documentation in the Trust deed. She also added that Corporate Trustees can improve the market depth by adopting digitization.

In the speech of the Director, Registration, Exchanges, Market Infrastructure and Innovation Department, Securities and Exchange Commission, Mr. Abdulkadir Abbas, he explained that The SEC considers the trustees as the last man standing in any given transaction. He noted that there is a need to protect the integrity of the market, stating that there are consequences for any trustee who is lacking in discharging its trustee duties.

He however commended the performance of Nigeria’s corporate trustees, highlighting that 33 out of the 35 trustees in the country are active. He also opined that over a decade now, there has been no issue of defaults for subnational bonds except for a few cases in terms of corporate bonds.

On the other hand, Mrs. Bolanle Adekoya, Partner at PwC, highlighted the major challenges facing the corporate trustee sector in Nigeria. Some of the notable challenges according to her include market volatility, cybersecurity and data protection risks, lack of deepening market, conflicts of interest, utilising assets for social impacts without breach of trust, as well as constant market, industry, and regulatory development.

Meanwhile, Dr. Bayo Olugbemi, the managing director/CEO of First Registrars & Investors Services Limited stated that the debt in the bond market is still very shallow and requires more investment opportunities. He noted that the tax exemption for subnational bonds is not enough to deter the market because the pool in the first place is not enough.

Also, speaking on the impact of corporate trustees in the Nigerian capital market is Mrs. Rukayat Sanusi, the Permanent Secretary, Lagos State Debt Management Office, represented by Mrs. Bolanle. She explained that the Trustees have made the market robust.

“The job of Corporate Trustees has gone a long way in ensuring the adequacy of the market. Although it’s worth noting that other capital market players have also done a good job in promoting transparency in the market,” she said.