A Kuwaiti court ruled Zain's April annual shareholders meeting invalid on Sunday, upholding a case brought by a former board member who opposed the election process but a company source said the decision will not derail the sale of Zain's Saudi stake. In April, Zain elected a new board including a top executive from Kuwait's family conglomerate Kharafi Group, and approved a $3 billion dividend for 2010.
The dividend has already been distributed. The court case centred on the manner in which the new board was elected.
A lawyer for Sheikh Khalifa Ali al-Khalifa al-Sabah, who was not re-elected in April, said on Sunday the decision was a first degree ruling. "The ruling is specifically about the elections of the board members," said lawyer Rashed al-Radaan.
A Zain company source, speaking on condition of anonymity, told Reuters that the firm will appeal the ruling.
"The ruling shocked the board but the company will appeal immediately," the source said. A Zain spokesman declined to comment, saying it was an issue between a shareholder and the board.
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