SK Macharia stripped controlling stake in Directline Assurance wars

The battle for the control of Directline Assurance Company has taken a fresh twist after a tribunal quashed a letter from the industry regulator last year, disregarding changes in the shareholding of the insurer over the years.

The Commissioner of Insurance had in a letter dated March 5, 2024 declared that by failing to obtain written approval of Insurance Regulatory Authority (IRA) and other shareholders, all share transfers effected after the company’s inception were void.

In effect, the letter stated that the firm’s shareholding status would revert to the 2005 position, giving media mogul and Chairman of Royal Media Services SK Macharia the majority shareholding.

But in a ruling on October 2, 2025, the Insurance Appeals Tribunals noted that the changes in the shareholding of the company were effected with the Commissioner’s knowledge, and that he has over the years, continued to license the company to carry out the insurance business.

“It is our finding that from the correspondence and the reports adduced, the commissioner of Insurance had knowledge of the share changes and in fact, some were undertaken following the commissioner’s circular on the increment of the paid up share capital,” the tribunal chaired by Gichinga Ndirangu said.

The tribunal added that the Commissioner of Insurance cannot deny his predecessor’s knowledge of the share changes over the years.

“We agree with the principle that a holder of a public office is bound by the lawful decision of his or her predecessors following the doctrine of legitimate expectation, administrative and institutional continuity and the rule of law. Good corporate governance demands so too,” said the tribunal.

The company was established in 1998 with John Gichia Macharia, through AKA Investments ltd holding 48 per cent shareholding, Terry Kiarie Wijenje through Janus Ltd holding 32 per cent shares and Macharia through Royal Media Services Limited holding 20 per cent.

A CR 12 as at February 12, 2023 showed that the company’s shareholding had changed so that AKM Investment held 10.36 per cent shareholding, Stenny Investments PTY Limited (holding in trust for AKM investments Limited) 20 per cent shareholding, Triad Networks Limited 19.99 per cent shareholding, Sureinvest Company Limited 20 per cent, Janus ltd held 20 per cent, Macharia, Purity Macharia, Royal Media Limited, Royal credit ltd and Dan Karobia held the remaining shareholding.

Macharia had stated that he incorporated the company together with his wife, Royal Credit Limited and late Dan Karubia in 1998.

The RMS boss said he entrusted his son to run the company, who invited another director known as Triple A Company Limited, to assist him in the running of the insurer.

Gichia, who later died in a road accident later invited Terry Wijenje to join him through Janus Ltd.

He said following his death, he allegedly discovered the fraud and said that IRA was under duty to correct the mistakes in the shareholding, in exercise of his duty as the regulator.

Macharia added that the rivals had created a false narrative that that they were the majority shareholders, yet they did not pay any money for the shares they claim to own.

He said the Act requires a person who wishes to acquire 10 per cent or more shares in an insurer to get the approval in writing of IRA, which his rival shareholders did not.

IRA on its part said it received numerous complaints about shareholding of the company alleging contravention of the Act.

The commissioner said he begun a review process on the ownership and control of the company with the objective of gaining a comprehensive understanding of the changes that had taken place.

The regulator said that it was noted that among others, the changes in the shareholding and directorship were effected without prior written approval of the commissioner.

Further, that Triple A Capital Limited wound up and AKM Investments Limited individually held more than 25 per cent of the company’s paid-up shares at the time.

The shareholding was therefore contrary to section 23 of the Insurance Act.

The IRA letter required the shareholders to regularise its shareholding and directorship within 45 days failure to which an action would be taken.

According to IRA, the letter was not a determination of the shareholding but a review of the records held by the commissioner and it was clear that it was a directive to the company to regularise the shareholding of the company.

AKM Investments Limited and Janus Limited said the disputes started after Macharia purported to take over the operations of the insurance firm following the death of his son.

The firms said IRA was aware of the shareholding changes and thus the commissioner could not deny that the authority had no notice of the shareholding changes over the period.

The transfers had taken place over time with the full knowledge, involvement and consent of the IRA and the commissioner.

And while the changes were being made, the commissioner did not at any time indicate that the changes were without his knowledge or consent. “Nonetheless, the commissioner repeatedly licensed the company after receiving external and internal notice of the changes,” Kevin McCourt said in an affidavit.

Further, some of the shareholding changes were made in order to comply with the requirement to increase general insurers’ share capital to Sh300million.

They said the share sale agreement involved huge amounts of money which would be wasted if the said changes were reversed.

McCourt added that the shareholding was finally determined in the arbitral award of Philip Alliker and IRA cannot interfere with the same by attempting to make changes in the company’s shares.

McCourt said the question of the company shareholding was settled by the arbitrator in May 2022 and Sureinvest, Triad and Stenny Investment PTY Limited, were the majority shareholders.

He said former commissioner Sammy Makove was aware and approved the share transfers which took place over time and the regulator cannot, decades later, claim that the share transfer were done without its knowledge.

There are two applications pending before the High Court- one seeking to nullify the decision and another seeking to enforce the award as an order of the court.

“In conclusion we are not convinced by the arguments of the respondents that the approval of the commissioner was not sought for the share transfer between 2005 to 2009 in light of the reports and communications produced by the appellants, which we have, which we have found have not been controverted,” said the tribunal.

The tribunal added that the attempt to revert the company shareholding to the position in 2005 would be contrary to the principles of legitimate expectation and institutional continuity.