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.

The Internal Auditors Office produces internal audit policies for Canon MJ and its subsidiaries as an independent specialist that reports directly to the president. It also conducts audits and assessments and advises on all business activities from the perspectives of the credibility of financial reports, the validity and efficiency of operations, legal compliance, and the conservation of assets. The auditors of Canon IT Solutions Inc. and Canon System & Support Inc. conduct assessments based on the same policies. The Canon MJ Group has 50 audit staff members.

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.

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 Company's controlling shareholder is Canon Inc. Important transactions with Canon Inc. are deliberated on, considered, and executed by the Board of Directors to ensure that the interests of minority shareholders of the Company are not damaged, after independent outside directors provide objective opinions rooted in extensive experience and superior knowledge of corporate management and other matters. The Company acts appropriately and fairly in all transactions, not only those with its controlling shareholder, to avoid compromising its independence and interests and to safeguard the interests of all shareholders.

Our parent company, Canon Inc., whose policy is to list its subsidiaries on stock exchanges to optimize its consolidated results, ensures earnings stability by maintaining the independence and dynamic management structures of those companies. This approach enhances Group value in keeping with the interests of all shareholders, including minority ones.
Canon MJ sells and services Canon products. It also sells and services the products and IT solutions of other entities in response to customer needs. To develop our own businesses, we have to make swift decisions, procure funds flexibly, and attract talented people. We are able to do this because we are listed and operate independently. We thus believe that expanding earnings through our businesses help increase the Canon Group's corporate value while benefiting shareholders overall.
The parent company's involvement in running our organization is limited to exercising voting rights as a shareholder. No parent directors hold concurrent positions with us. Half of the members of our voluntary Nomination and Remuneration Committee are independent outside directors, ensuring transparency and fairness. We confirm that transactions with Canon Inc., such as to determine purchase prices and interest rates on loans, do not disadvantage either party. We only implement these transactions after signing contracts.

The Canon MJ Group only holds shares of other listed companies when these shareholdings help to improve the corporate value and the medium- to long-term development of the Group, taking into consideration factors such as management strategies, business alliances, the maintenance and strengthening of transactions, the development of collaborative businesses, and the creation of new forms of synergy.
The Company reviews the reasonableness of individual reciprocal cross-shareholdings at meetings of the Board of Directors in a comprehensive assessment that considers the significance of shareholdings and other results of a qualitative evaluation as well as a quantitative evaluation of the value of transactions with investment targets and dividends and whether unrealized gains are commensurate with capital costs, on a regular basis each year.
As a result of the assessments, when it is judged that holding certain shares is no longer reasonable, the holding will be reduced through the sale of said shares. As of December 31, 2022, the Company held 49 listed stocks as cross-shareholdings, a decline from the 59 listed stocks held as strategic shareholdings as of December 31, 2021. In addition, the shares of the company to which the Company's outside director is affiliated have been sold as of December 31, 2022.

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.

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.

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