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UMC announces plan to pay future dividends in cash

United Microelectronics Corp (UMC, 聯電), the world's second-largest contract chipmaker, said yesterday it planned to pay all dividends in cash in future to minimize the adverse impact of a new accounting rule.

Shareholders yesterday approved the proposed payout of NT$12.46 billion (US$377.5 million), or NT$0.70 per common share, in cash for last year's dividend, as well as NT$2.32 billion payment to employees.

"We intend to pay all future dividends in cash," UMC chairman Jackson Hu (胡國強) said after the annual shareholder's meeting in Hsinchu.

The move matches that of larger rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which plans to gradually increase the cash portion of its dividend payments in order to cope with the change in the accounting rule that takes effect next year.

The new rule stipulates that Taiwanese companies will have to deduct the market value of any stock given to employees from their annual earnings figures, a move the government hopes will boost corporate financial transparency.

The cash paid to UMC employees accounted for 15 percent of the total NT$14.8 billion paid out last year, during which the chipmaker earned NT$32.62 billion, mostly from selling assets.

UMC shareholders yesterday also voted to give the go-ahead to a 30 percent reduction in capital.

Under the plan the company's capital would drop NT$57.39 billion to NT$133.92 billion from the current NT$191.44 billion. UMC aims to pay back approximately NT$3 per share.

Meanwhile, in response to a shareholder's concern about the lack of progress in accounting for a 15 percent stake in He Jian Technology (Suzhou) Co (和艦), given to UMC by the Chinese chipmaker in exchange for UMC's help in setting the firm up, Hu said the company hopes to discuss the issue with the government in the near future.

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