A Legally Compliant Real Estate Tokenisation Structure Under Nigeria’s ISA 2025

1. Core Principle: The Token Must Represent a Regulated Security

Under ISA 2025, any investment offering that:

• pools capital from investors
• generates profit from an underlying asset
• offers transferable interests

will likely qualify as a security or collective investment scheme.

Therefore, the token should not represent direct property ownership, but rather:

a regulated financial instrument linked to the property.

This ensures the structure fits within the capital market framework supervised by the Securities and Exchange Commission (SEC).

The SEC has authority to regulate securities markets and digital asset trading platforms.

2. Step-by-Step Legal Structure

Step 1 — Property Acquisition Through an SPV

A Special Purpose Vehicle (SPV) is created to legally own the real estate.

Structure:

• Property

• SPV (Property Holding Company)

• Investment Vehicle / Token Issuer

• Digital Tokens Representing Investment Units

Investors

The SPV becomes the legal title holder of the property.

Examples of assets:

• residential developments
• commercial buildings
• student housing
• hotels
• warehouses
• shopping centres.

Step 2 — Convert the SPV into an Investment Scheme

The SPV is structured as a Collective Investment Scheme (CIS) or investment company regulated by the SEC.

ISA 2025 recognises and regulates collective investment schemes and investment companies.

This structure allows:

• multiple investors
• pooled capital
• professionally managed assets.

Investors do not directly own the property, but instead own units in the scheme.

Step 3 — Tokenisation of Investment Units

Instead of traditional fund units or shares, the scheme issues blockchain tokens representing ownership units.

Each token represents:

• fractional economic interest in the SPV
• share of rental income
• share of capital appreciation.

Example:

Property Value: $10,000,000

Total Tokens Issued: 10,000,000

1 Token = $1 of property value

This creates fractional ownership accessibility.

3. Legal Nature of the Tokens

Under Nigerian securities law, these tokens would likely be classified as:

Tokenised Securities

Possible classifications include:

• equity tokens (shares in the SPV)
• fund units (collective investment scheme units)
• asset-backed securities

In legal terms, the token becomes a digital representation of a security instrument.

ISA 2025 allows securities issuance and transfer through electronic systems.

This provides a legal foundation for tokenisation.

4. Token Issuance Requirements

To comply with ISA 2025, the issuer must:

Register the Offering

The offering must be registered with the SEC.

This includes filing:

• prospectus
• investment memorandum
• risk disclosures
• financial statements.

The Act requires registration of securities offered to the public.

Prospectus Disclosure

The prospectus must disclose:

• property valuation
• rental income projections
• management structure
• investor risks
• token rights
• liquidity mechanisms.

Misstatements in prospectuses attract civil and criminal liability.

5. Secondary Trading of Property Tokens

After issuance, tokens could trade on:

Regulated Digital Asset Exchanges

ISA 2025 allows the SEC to regulate:

• digital asset exchanges
• virtual asset service providers
• online trading platforms.

This means property tokens could trade on:

• a licensed digital asset exchange
• an alternative trading system
• a specialised tokenised securities exchange.

6. Custody and Asset Protection

To protect investors, the structure would require:

Custodian

A regulated custodian holds:

• title documents
• SPV share certificates
• investor funds.

ISA 2025 empowers the SEC to regulate custodians of securities and assets.

Trustee

A trustee protects investor rights by overseeing:

• SPV governance
• asset management
• compliance with scheme rules.

This is common for collective investment schemes globally.

7. Blockchain Infrastructure Layer

The blockchain layer performs several functions:

Token Registry

Records:

• token ownership
• transfer history
• investor balances.

Smart Contract Governance

Smart contracts automate:

• dividend distribution
• rental income payouts
• token transfers
• voting rights.

Compliance Integration

Compliance systems enforce:

• KYC
• AML checks
• investor accreditation rules.

8. Income Distribution Model

Revenue flows from property to token holders.

Example:

• Rental Income

• SPV

• Investment Scheme

• Token Holders

Distributions may include:

• rental income dividends
• capital appreciation
• liquidation proceeds on sale.

9. Example Real Estate Tokenisation Case Study

Imagine tokenising a $20M commercial office building in Lagos.

Structure:

Office Building

Value: $20M

• SPV owns property

• Investment Scheme created

• 20,000,000 tokens issued

• Each token = $1 of ownership

Rental income:

Annual Rent = $2,000,000

Distributed to token holders proportionally

This structure:

• democratizes property investment
• enables global investors
• provides liquidity through token trading.

10. Regulatory Advantages of the Structure

This model complies with:

• ISA 2025
• SEC capital market supervision
• investor protection requirements.

It avoids:

• illegal investment schemes
• unregistered securities offerings
• regulatory uncertainty.

11. Why This Structure Is Globally Accepted

The same SPV + tokenised securities structure is used in:

Dubai

Real estate tokenisation integrates:

• Dubai Land Department
• VARA digital asset regulation.

Singapore

Tokenised securities operate under:

• MAS capital market licensing.

Switzerland

Tokenised securities exist under:

• DLT securities law.

12. Key Legal Risks to Avoid

Any Nigerian RWA tokenisation project must avoid:

Illegal Investment Schemes

Offering tokens without SEC approval could violate securities law.

Misrepresentation

False asset valuation or income projections could trigger liability.

Unregulated Exchanges

Trading tokens on unlicensed platforms would be illegal.

Key Strategic Insight

The Investments and Securities Act 2025 quietly opens the door for tokenisation in Nigeria.

While the law does not explicitly mention RWA tokenisation, it already provides:

• digital securities issuance
• digital asset exchange regulation
• electronic trading infrastructure
• collective investment scheme frameworks.

With proper structuring, real estate tokenisation could legally operate under the Nigerian capital market regime today.

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