The Insurance Regulatory Authority (IRA) has responded to Royal Media Services Chairman Dr. S.K Macharia on the standoff over the regulation of Directline Assurance Company Limited.
IRA Commissioner Godfrey Kiptum in a statement on Monday, December 23, said that the authority had taken note of communication released by Dr. Macharia regarding regulations of the Directline Assurance (the insurer), and the status of policies duly issued by the insurer.
The insurance authority dismissed the communication saying that the insurer’s operations still continue as scheduled.
“The insurer continues in operation as licensed and approved by IRA. All insurance policies issued by Directline Assurance Company Limited remain in full force and effect. Policyholders are assured that their contracts remain valid, and the insurer is fully liable for any claims arising therefrom. Any purported status to the contrary is void of legal effect,” read part of the statement.
On the demand for rectification of CR12 Forms, the IRA Commissioner said that CR12 Forms are issued under the Companies Act and within the purview of the Business Registration Service and the Registrar of Companies.
IRA on Directline regulation
Kiptum argued that the Authority has no legal mandate to alter such forms or make any changes whatsoever, adding that any person requiring any rectification of such records should make the necessary application to relevant statutory offices in accordance with the governing laws.
“Additionally, there is no connection between changes in shareholding of an insurance company and validity of insurance policies duly issued by the insurer to policyholders,” the statement adds.
IRA has also assured all stakeholders that it remains steadfast in its regulatory duties and mandate to protect the interest of policyholders and insurance beneficiaries.
Also Read: SK Macharia Warns Passengers Against Boarding Vehicles Covered by Directline Insurance
The statement by IRA comes after Royal Credit Chairperson Dr. Macharia, along with other shareholders of Directline Assurance moved to protest the changes made by the company’s directors, who were appointed following a court ruling.
Macharia had in a statement on December 9 decried recent changes made by the court-appointed directors, highlighting the changes which included senior managers being sent on compulsory leave by the directors.
S.K Macharia Protests Changes by Directline Interim Board
He said the three sole shareholders in the company sought the intervention of Commissioner Kiptum, as well as the Cabinet Secretary and PS Finance, to stop the stripping of the assets of the company by the partially constituted board of directors.
The board constitutes of Kenneth Ndura, Maina Maingi and Titus Karanja who took office on October 4, 2024.
In the new move, shareholders of the Directline Assurance, which is the leading provider in Kenya’s Public Service Vehicles (PSV) insurance market, sent documents to the Commissioner of insurance showing that the court-appointed directors had instructed the finance director to pay director’s fees and allowances for a period when different directors approved by the shareholders of the company were in office.
The directors who were in office at the time were compensated for their services during this period.
Also Read: Court Gives Fresh Ruling on SK Macharia- Directline Case
The board has also instructed the finance director to pay Sceplus Consulting certified secretaries Kenya for alleged secretarial services to the company.
At the same time, Royal Credit condemned the partially constituted board’s move to put four senior management staff members on compulsory leave for their refusal to make an authorized payment.
Court ruling
This came after Justice Alfred Mabeya of the High Court in October ordered a temporary joint board to be constituted by AKM Investments Limited, Janus Limited and RMS and directed bank signatories to be appointed by the interim board.
Justice Mabeya in his ruling said that the court at the time believed it was essential to establish a caretaker board of directors to ensure that the company’s operations continued smoothly and that it meets its obligations.
The judge observed that given that a consent had been entered by the parties, the composition of the board should align with the terms thereof.
Further, Justice Mabeya allowed the audit of Directline Insurance books of account and report compiled by the interim board to be undertaken within 90 days.
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