We recognize that management transparency and the monitoring of progress toward management targets are extremely important. This is reflected in our wide-ranging initiatives to strengthen corporate governance.
For details, please see our Corporate Governance Report.

Canon MJ has three outside directors and three outside Audit & Supervisory Board members. Pursuant to the consent of all Audit & Supervisory Board members and the approval of the Board of Directors, we implemented our Independence Standards for Independent Directors/Audit and Supervisory Board Members in order to clarify the standards for ensuring the independence of outside directors and outside Audit & Supervisory Board members in keeping with Japan's Corporate Governance Code and the independence criteria set by securities exchanges in Japan. Our outside directors and outside Audit & Supervisory Board members satisfy the independence criteria and help maintain and improve the transparency and accountability of the Board of Directors. The Company does not have dedicated organizations or employees to assist outside directors or outside Audit & Supervisory Board members in their duties. Executive directors and other officials provide outside directors with prior explanations of Board of Directors' meeting agendas as needed. Internal auditors, directors in charge of operations, and other officials provide outside Audit & Supervisory Board members with prior explanations of Board of Directors' meeting agendas as needed. Outside Audit & Supervisory Board members attend Audit & Supervisory Board meetings, as well as liaison meetings conducted as needed, to exchange information on important matters and audit details among Audit & Supervisory Board members.

The Internal Auditors Office (IAO) was established as an independent organization dedicated to performing audits of the Company and operating under the direct supervision of the President of the Company. IAO prepares the policies of the internal audit divisions of the Company and the entire Group and conducts audits of all management activities to examine the reliability of financial reports, the effectiveness and efficiency of business operations, compliance with laws and regulations, and the protection of corporate assets, and assesses the results of audits and provides advice to the audit targets.
The results of audits are reported regularly to the President & Representative Director, other Directors and the Audit & Supervisory Board.
In addition, the internal audit divisions of Canon IT Solutions Inc. and Canon System & Support Inc. conduct audits under the same policies. The Canon MJ Group has about 60 audit staff members.

The Company selects independent auditors, having comprehensively considered quality management system of the accounting firm, the independence of audit team, the level of audit fees and communications of the independent auditors with Audit & Supervisory Board Members, the management and the internal audit divisions.
The regular rotation policy of Engagement Partners is as follows.

In case the independent auditor(s) is/are deemed relevant to each item of the Paragraph 1, Article 340 of the Companies Act, the Audit & Supervisory Board will dismiss the independent auditor(s) with the consent of all the Audit & Supervisory Board Members, as necessary.
Moreover, the Audit & Supervisory Board prepare the proposals for the General Shareholders’ meeting to dismiss the independent auditor(s) or refuse the reappointment, in case the accountancy service is not regarded to be provided appropriately due to occurrence of grounds for harming qualification and the independence of the independent auditor(s).

We conducted a questionnaire for directors and Audit & Supervisory Board members on the effectiveness of the Board of Directors and analyzed and evaluated the effectiveness of the Board of Directors. The assessment criteria were (1) deliberations of the Board of Directors, (2) the composition of the Board of Directors, (3) succession planning, and (4) the sufficiency or process of discussions. These talks confirmed the overall effectiveness of the Board of Directors. Going forward, we will strive to ensure and improve the effectiveness of the Board of Directors even further by continuing to enhance discussions on matters to be considered by the Board of Directors as well as its composition, management training, and other matters. In this way, we will improve the decision-making function of the Board of Directors by incorporating the opinions of directors and Audit & Supervisory Board members obtained through the questionnaire into the operation of the Board of Directors, thereby achieving sustainable growth and increasing corporate value over the medium to long term.
Based on the results of the evaluation in fiscal 2022, the Company has considered the composition of the Board of Directors, and from the perspective of improving service quality and ensuring diversity, at the 55th Ordinary General Meeting of Shareholders held on March 29, 2023, the Company appointed one female outside director with extensive experience in and exceptional insight into corporate management, the service industry, and diversity.

The controlling shareholder of the Company is the parent company, Canon Inc. Important master agreements for transactions with the controlling shareholder are concluded following a resolution by the Board of Directors. In addition, for a risk of conflicts of interests occurring between controlling shareholder and minority shareholders regarding which deliberations and considerations are deemed necessary for the purpose of protecting the interests of minority shareholders, the Special Committee consisting of Independent Outside Directors makes discussions and delivers a report to the Board of Directors. No arbitrary decisions are made on terms, etc. of transactions with the controlling shareholder. In addition, the Company protects the interests of all its shareholders by conducting all transactions appropriately and fairly, including transactions with the controlling shareholder, to ensure there is no damage to the Company’s independence and interests.

Based on the Companies Act, the Company has determined the basic policy for its internal control system to ensure appropriate business practices and is deploying that system in line with the policy. The Internal Controls Evaluation Committee has been established for the purpose of developing an internal control system for the entire Canon MJ Group, consisting of officials representing corporate departments and subsidiaries.

In accordance with the Financial Instruments and Exchange Act, listed companies must now submit reports on internal controls. The Company started to submit internal control reports on the evaluation of the effectiveness of internal controls on financial reporting in the fiscal year ended December 31, 2009.

To contribute to the sustainable growth and medium- to long-term enhancement of corporate value, the Company holds constructive dialogue with shareholders through various means, such as general meetings of shareholders, briefings on long-term management objectives and medium-term management plans, financial results briefings, and interviews with major institutional investors.

Please refer to ESG Data for more details on Governance data.

The Company aims to build long-term relationships of trust with everyone participating in capital markets and acquire suitable appraisals by making timely, appropriate, and fair disclosure of not only financial information but also non-financial information and by enhancing opportunities for dialogue. In addition, we strive to report insights and assessments brought to light through dialogue to the Board of Directors, the Management Committee, and other decision-making entities and reflect them in the Company's management in order to achieve improvements in corporate value over the medium to long term. We have established the Canon MJ IR Policy to clarify our stance to investor relations (IR) disclosure, which is disclosed on the IR website.