Canon 2005 Annual Report Download - page 12

10
Basic Policy
Canon recognizes the vital importance of
strengthening management supervision
functions, with the purpose of maintain-
ing transparency. Numerous measures
have been implemented to improve
corporate governance as we strive to
continuously enhance Canon’s corporate
value. Canon’s directors, having been
carefully chosen from among our person-
nel, are completely familiar with Canon’s
Guiding Principles and the Canon Group
Code of Conduct, and are therefore best
positioned to implement corporate
governance effectively. Canon’s original
system of internal audit along with its
committees for compliance and internal
control combine to form a comprehensive
corporate governance structure.
Board of Directors
All matters of importance to the
Company are decided at Board of
Directors’ meetings and management
meetings attended by all directors. As of
December 31, 2005, the Board consists of
25 directors. Canon has not adopted an
outside director system in order to realize
a more streamlined and efficient manage-
ment decision-making process. This is the
main reason why directors are chosen
from among Canon personnel: they have
followed these same codes of behavior
and have been subject to close scrutiny
within the Company over many years. To
assure the functions commonly associated
with outside directors, we require all
directors to undergo a thorough program
of compliance education.
Auditing System
Canon’s Board of Corporate Auditors
consists of four members, two of whom
are outside corporate auditors, as of
December 31, 2005. The auditors attend
board, management and various commit-
tee meetings; listen to business reports
from the directors; carefully examine
documents related to important decisions;
and conduct strict audits of the Company’s
business and assets.
The Corporate Audit Center, which
serves as an internal auditing division,
conducts audits covering such areas as
compliance and internal control systems,
and provides assessments and proposals.
Various relevant administrative divisions
work very closely with the Corporate
Audit Center to inspect such areas as
Governance Structure (as of December 31, 2005)
Canon Inc.
Subsidiaries &
Affiliates
Board of Directors
General Meeting of Stockholders
President and CEO Executive Committee
Corporate Audit Center
Headquarters Administrative Divisions
Product Group Operations
Management Strategy Committee
New Business Development Committee
Corporate Ethics and Compliance Committee
Internal Control Committee
Global Legal Affairs Coordination Committee
Global Marketing Promotion Committee
Marketing Subsidiaries & Affiliates
Manufacturing Subsidiaries & Affiliates
R&D Subsidiaries & Affiliates
Disclosure Committee
Production Automation Special Committee
Board of Corporate Auditors
Canon believes that an internalized sense of duty and ethics among our employees
and management is the basis for a sound compliance system.
CORPORATE GOVERNANCE