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18
the Canon Group Code of Conduct was established as a standard
for executives and employees.
Canon holds a Compliance Week twice per year to give employ-
ees a chance to discuss issues related to compliance and corporate
ethics and to recognize the importance of their individual actions in
the workplace.
Disclosure
Canon makes every effort to disclose information on its manage-
ment and business strategies as well as its performance results to all
stakeholders in an accurate, fair and timely manner. To this end,
Canon holds regular briefings and posts the latest information on its
Website together with a broad range of disclosure materials. Canon
has established its own Disclosure Guidelines, in addition to a
Disclosure Committee that serves to ensure strict compliance with
disclosure regulations prescribed by stock exchanges.
With 43.5% of Canon’s shares owned by non-Japanese investors
as of December 31, 2007, the Group goes to great lengths to
promote close relations with non-Japanese institutional investors,
maintaining IR bases in Europe and the United States and working to
ensure that investors inside and outside of Japan have access to the
same information. Canon will continue to promote transparency and
understanding of its activities by practicing thoroughgoing disclosure.
Significant Differences in Corporate Governance Practices
between Canon and U.S. Companies Listed on the NYSE
Section 303A of the New York Stock Exchange (the “NYSE”) Listed
Company Manual (the “Manual”) provides that companies listed on
the NYSE must comply with certain corporate governance stan-
dards. However, foreign private issuers whose shares have been
listed on the NYSE, such as Canon Inc. (the “Company”), are
permitted, with certain exceptions, to follow the laws and practice
of their home country in place of the corporate governance prac-
tices stipulated under the Manual. In such circumstances, the
foreign private issuer is required to disclose the significant differ-
ences between the corporate governance practices under Section
303A of the Manual and those required in Japan. A summary of
these differences as they apply to the Company is provided below.
1. Directors
Currently, the Company’s board of directors does not have any
director who could be regarded as an “independent director” under
the NYSE Corporate Governance Rules for U.S. listed companies.
Unlike the NYSE Corporate Governance Rules, the Corporation Law
of Japan (the “Corporation Law”) does not require Japanese com-
panies with a board of corporate auditors such as the Company, to
appoint independent directors as members of the board of direc-
tors. The NYSE Corporate Governance Rules require non-manage-
ment directors of U.S. listed companies to meet at regularly
scheduled executive sessions without the presence of management.
Unlike the NYSE Corporate Governance Rules, however, the
Corporation Law does not require companies to implement an
internal corporate organ or committee comprised solely of inde-
pendent directors. Thus, the Company’s board of directors currently
does not include any non-management directors.
2. Committees
Under the Corporation Law, the Company may choose to:
(i) have an audit committee, nomination committee and compensa-
tion committee and abolish the post of corporate auditors; or
(ii) have a board of corporate auditors.
CORPORATE GOVERNANCE
Introduction of an Executive Officer System
At a Board of Directors meeting held on January 30, 2008,
Canon resolved to introduce an Executive Officer System
effective April 1, 2008. Executive Officers are appointed
and discharged by the Board of Directors and have a term
of office of one year. The number of Executive Officers has
initially been set at eight.
Taking into consideration growth in the scope of its
business activities, Canon recognizes the need to bolster its
management execution structure. By promoting capable
human resources with accumulated executive knowledge
across specific business areas, the Company is endeavoring
to realize more flexible and efficient management opera-
tions. To this end, Canon will gradually increase the num-
ber of Executive Officers and further solidify its
management systems.