Microsoft holds the line on dividends

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Microsoft told shareholders at the company's annual general meeting it has no plans to pay dividends from its US$40.5 million cash while it faces the threat of further litigation.

The statement comes after Friday's US District Court ruling endorsing Microsoft's anti-trust settlement with the US government.

"While the ruling on Friday was a positive, we still face some significant legal issues, and in light of those legal issues to date the board has determined it would not be appropriate to commit to a long-term program like a dividend until that's cleared," Microsoft chief financial officer John Connors told the meeting.

Microsoft has not paid a dividend since the company was publicly listed in 1986. Shareholders have so far been satisfied with increasing share values, but with Microsoft's share price down 15 percent this year, the company could come under pressure to fund dividends from its still growing pile of cash.

At the meeting, Microsoft's shareholders re-elected the company's eight-member board and approved an annual employee stock purchase plan.

Shareholders voted down proposals that Microsoft adopt a more active human rights stance in China and that the company should limit the non-audit fees of its auditor to a quarter of its total payment to guarantee financial independence.

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