Unit Trust: An Appraisal of Applicable Laws

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Unit trust (UT) is a difficult and dry subject and it would seem that this subject has not been extensively discussed by academic writers in Nigeria. The whole concept of the UT is premised on a mode of investment beneficial to both the small and big investors. It is a scheme designed to enable individual and/or corporations, especially institutional investors to pool together their resources for another corporate legal entity to make investment while they hold units in the scheme as evidence of the resources so contributed. This work is to serve as an examination of the legal framework of this unique system of investment by examining whether our laws relating to the UT addressed all the issues relevant to the effective and efficiency functioning of the UT scheme, and also whether the law facilitates the underlying objects of the UT scheme. In this regard, it would be appropriate to examine whether the existing legal framework regulating the UT in Nigeria sufficiently offers protection to the small investor, while allowing fund managers/trustees sufficient flexibility and scope to raise funds quickly and invest the funds so raised in the most rewarding and secure instruments. This work is also for students of both law and business management on the need to understand that the trust concept does not only lie within the ancient concepts of its doctrine, maxims and other equitable concepts, but that commercial trust, which is considered as a living trust is now the modern source of adventure for researchers and a veritable tool for commercial lawyers and investment advisers. This long essay is therefore is made up of four chapters. In the chapter one, this is the introduction, the history of the trust concept, the nature of trust, which will include the definition of trust and types of trust. Thereafter, the paper will consider how a trust is created, the history of unit trust and unit trust as specie of trust. Chapter two will consider the basic aspects of the UT. The chapter will deal with what the UT is all about. In expounding what UT is all about, the structure of the UT, types of UT, how the UT can be created, investments in the UT will be discussed. This chapter will also discuss the investment of UT funds as well as the management and administration of the UT. The regulation of the UT will be the focus of chapter three. First, I will review the objectives of regulation in this regard. After looking at the objectives of regulation, I will consider the legal framework of the UT is Nigeria. Then I will do a comparative analysis of the regulatory framework for the UT in Nigeria and the key aspects of laws regulating the UT in other jurisdiction, with special focus on Mauritius and the United Kingdom. Chapter four will review the current position of the law and practice, while pointing out any identifiable gaps in the law and attempting to define the way forward. It is intended that this work shall excite the interest of students in the law of trusts as well as generate further work in this area.