Blind Trusts in Nigeria: Key Structuring Considerations

A blind trust is a type of legal trust in which the person who creates the trust (the settlor) gives control of their assets to an independent trustee, and crucially has no knowledge or control over how those assets are being managed once the trust is set up. In other words, the settlor “blinds” themselves to what is happening inside the trust.

How is a Blind Trust Structured?

In a blind trust, the settlor transfers assets (shares, businesses, investments, etc.) into a trust. An independent trustee manages those assets. The settlor does not receive information about specific investments or transactions. The trustee has broad discretion to buy, sell, and manage assets.

The key structuring consideration in a blind trust is information restriction, where the settlor is intentionally kept in the dark.

2. Transaction Structures 

Blind trusts are mainly used to prevent conflicts of interest or the appearance of them. We consider some of the more common use cases below. 

(a) Politicians and public officials

A government official may place assets in a blind trust so they cannot influence decisions that could benefit their investments. For example, a minister owns shares in telecom companies. By placing them in a blind trust, they no longer know whether they are buying/selling those shares. This helps avoid accusations that policy decisions are influenced by personal gain.

(b) High-net-worth individuals

Business owners or executives use blind trusts when. This would be the case where for instance a business man is entering a sensitive role and wanting to avoid insider knowledge issues or qualifying for that role. 

(c) Corporate governance / Mergers & Acquisition 

In merger and acquisition transactions, blind trusts are used as a regulatory safeguard to manage control and prevent conflicts of interest during the period between signing and final regulatory approval.

A common challenge in M&A is that once parties agree to a transaction, there is often a delay before completion due to competition, antitrust, or sector-specific approvals. During this interim period, regulators are concerned about the possibility that the acquiring party may begin to exercise influence over the target company before the transaction is formally cleared. This is often referred to as “gun-jumping.” To address this risk, regulators or parties may require that the shares or control rights of the target company be placed into a blind trust.