An Analytical Study of the Legal Framework for Investor Protection in Nigerian Collective Investment Schemes

Collective investment schemes including mutual funds, unit trusts, and real estate investment trusts play an important role in mobilising savings for capital market investment in Nigeria, yet the legal protections available to scheme participants under the Investment and Securities Act, SEC rules, and trust law principles have not been comprehensively examined in recent scholarship. This study analytically examines the investor protection framework applicable to collective investment scheme participants in Nigeria, focusing on disclosure requirements, fund governance standards, fee transparency, and redemption rights. A doctrinal analysis of ISA 2007, proposed ISA 2024, SEC CIS Rules, and relevant trust law principles was combined with empirical analysis of 20 registered fund prospectuses and annual reports from 2020 to 2023 and interviews with 15 fund managers and 10 investment lawyers. Results indicate that fee disclosure in prospectuses is frequently inadequate, with total expense ratios not consistently disclosed in investor-accessible formats. Fund governance independence is weak, with many trustee companies affiliated with fund management companies. Redemption suspension provisions are broadly drafted without statutory limitations. The study fills an analytical gap in Nigerian collective investment scheme regulation research and concludes that the ISA reform presents an opportunity to significantly strengthen CIS investor protection through enhanced fee transparency mandates, independent custodian requirements, and statutory redemption rights. Recommendations align with IOSCO principles for CIS regulation.

Keywords: collective investment schemes, investor protection, mutual funds, SEC Nigeria, ISA reform