A Nairobi court has extended an order barring the Directorate of Criminal Investigations (DCI) from executing search warrants on Dr. SK Macharia, Chairman of Royal Credit, amid an ongoing legal dispute over the control of Directline Assurance.
The court’s ruling, which upholds the current injunction, will remain in place until March 2025, ensuring that no further searches will be conducted on Macharia’s premises during this period.
Magistrate Dolphina Alego, who presided over the case, set a hearing date for March 10, 2025, and confirmed that “the status quo will remain” until that time.
The dispute centers on Macharia’s claim that Directline Assurance was unlawfully taken over through the use of a forged CR12 form.
In late September, Macharia filed a petition in the Milimani Law Courts, seeking to reclaim ownership of the company, which he co-founded with his wife.
The petition alleges that the original shareholders were defrauded, with the CR12 form being altered to reflect different ownership and shareholding.
Macharia, represented by his lawyer Danstan Omari, is asking the court to formally recognize him and his wife as the legitimate owners of the company.
He is also demanding a full investigation into the alleged misappropriation of Ksh. 8 billion from policyholders, which he claims was taken by the fraudulent directors.
Lawyer Martina Swiga explained that the original CR12 had been tampered with and that the ILRA (Insolvency and Litigation Resolution Authority) had confirmed that the document was forged.
“S.K. Macharia and his wife were the true founders of the company.
The alteration of the CR12 and the movement of shares without their consent is illegal,” Swiga said.
In addition to seeking the restoration of ownership, Macharia is calling for the prosecution of the directors involved in the alleged fraud.
He is also pushing for the urgent re-registration of the company under its rightful owners to protect its stakeholders.
A critical issue raised by Macharia and his legal team is the potential risk posed to public service vehicle (PSV) users.
According to Omari, Directline Assurance carries insurance for 98% of all PSV vehicles, leaving millions of passengers unknowingly exposed to the possibility of being uninsured due to the disputed ownership.
“98% of PSV premiums are underwritten by Directline. If this matter is not addressed quickly, nearly all of those passengers could be misled into thinking they are covered when they are not,” Omari warned.
The dispute follows Directline Assurance’s decision to suspend its insurance operations on September 10, 2024, after the original shareholders discovered that the CR12 document had been altered.
In response, the Association of Kenya Insurance Companies (AKI) was instructed to stop issuing insurance certificates or stickers in Directline’s name.
The case is set to continue in March 2025, with significant implications for the company’s future and the protection of policyholders.
