High Court blocks DCI raids on SK Macharia’s properties amid Directline Assurance dispute

Oluwatosin Racheal Alabi -

Key Points

  • The High Court has granted Macharia a temporary injunction, barring the DCI from any search activity on his premises until March 2025.
  • The court case centers on Macharia’s decision to dissolve Directline Assurance, which has led to legal disputes with family and regulatory bodies.
  • A follow-up hearing is scheduled for March 10, 2025, when the court will further address the DCI’s application and the underlying issues.

Kenyan media mogul and Royal Media Services (RMS) chairman, SK Macharia, has secured a court order preventing the Directorate of Criminal Investigations (DCI) from conducting searches on his properties until March 3, 2025. The High Court ruling, issued by Magistrate Dolphina Alego on Nov. 6, 2024, provides temporary relief to Macharia, who faces a legal dispute over the dissolution of Directline Assurance, an insurance firm in which he holds substantial shares.

Directline Assurance legal conflict

The conflict began in October 2024 when Macharia, as the majority shareholder, initiated the dissolution of Directline Assurance, a significant entity in Kenya’s insurance industry. His decision sparked opposition from a family member, his grandchild, who is challenging the dissolution on governance and shareholder rights grounds. Macharia’s attorney, Danstan Omari, argues that the grandchild lacks standing since he is not an official shareholder. Omari asserts that Macharia acted within his legal rights to dissolve the company in its best interest. The case has raised industry concerns due to Directline Assurance’s prominent role in the motor insurance market, where it reportedly held over seventy percent of the market share. The Insurance Regulatory Authority (IRA) has taken note, given the potential market instability resulting from Directline’s closure.

Court intervention and DCI’s involvement

Following Directline’s shutdown, the DCI sought to conduct searches on Macharia’s properties to obtain documents and seize assets related to the company. Macharia contested the move, arguing that he was not adequately notified or given an opportunity to challenge the warrant. Magistrate Alego’s ruling granted his appeal, halting any further DCI actions until the next court hearing on March 10, 2025.

Impact on Kenya’s insurance landscape

Directline’s collapse has created a regulatory void in the motor insurance sector, prompting the IRA to address potential market disruptions. The dispute underscores issues of corporate governance and regulatory compliance within Kenya’s insurance industry. Stakeholders are expected to follow the case closely, as the court’s decision in March could significantly impact industry governance standards and regulatory practices.