TRANSLATION Securities Code: 7739
NOTICE OF CONVOCATION OF
THE ORDINARY GENERAL MEETING OF
SHAREHOLDERS FOR
THE 79
TH
BUSINESS TERM
We are pleased to present our notice of convocation of the Ordinary General Meeting of
Shareholders for the 79th Business Term (from January 1, 2017 to December 31, 2017).
March 2018
President & CEO
Hisashi Sakamaki
The world economy in the current business term was, as a whole, showing gradual
recovery, however, there were still uncertainties about the future prospect of the
economies and politics in China and emerging Asian countries and the political situations
in the European countries.
With respect to the Japanese economy, moderate recovery trend continued thanks to
increase of corporate profits, improvement of employment situations and recovery of
personal consumptions.
Under these circumstances, the Canon Electronics Group, in aiming to expand the
corporate profitability, used its utmost efforts to ensure business results and improve
corporate profitability by enhancing sales activities and increasing productivity
throughout the company. As a result, consolidated net sales for the current business
term was 83,769 million yen (up 0.6% from the previous term), consolidated ordinary
profit was 9,886 million yen (up 24.2% from the previous term), profit attributable to
owners of parent was 7,739 million yen (up 39.4% from the previous term), thus increase
in sales and profit.
For the term-end dividend, to express gratitude to our shareholders for their continuous
support, we will propose a distribution of 40 yen per share at the Ordinary General
Meeting of Shareholders for the 79th Business Term. As a result, the full-year dividend
amount will be 70 yen per share, which is the increase of 10 yen compared to the previous
term.
In the space related field that we are working on as a new business, we are carrying out
the operation of the ultra-small satellite "CE-SAT-I" which was launched and put into
orbit in June 2017 successfully. We were able to take a number of ground photographs by
a photographing system which are consisted of a telescope and a Canon EOS 5D Mark
III camera. It enabled us to achieve a ground sampling distance of 1 m. From now on,
we will accelerate our preparation for the commercialization of our space business,
including the external sale of satellite bodies, photographed images and components
manufactured in-house.
Although the future of the global economy is still expected to remain uncertain and
unpredictable, we will continue to unite the power of all our employees and work on
improving our performance even more than ever we did it.
MANAGEMENT POLICY
Aiming to improve the corporate quality,
GROWTH & EXCELLENCE”
Forming a considerate person as a member of society
Company & Employee receiving respect and trust from the world
_____________________________________________________________________________
INDEX
TO OUR SHAREHOLDERS
1
“
CE-SAT-I
” N
EWS
3
NOTICE OF CONVOCATION OF THE ORDINARY GENERAL
5
MEETING OF SHAREHOLDERS FOR THE 79TH BUSINESS
TERM
GUIDANCE NOTES ON THE EXERCISE OF VOTING RIGHTS
7
REFERENCE DOCUMENTS FOR GENERAL MEETING OF
8
SHAREHOLDERS
Propositions:
Item No.1 -Dividend from Surplus
Item No.2 -Election of Twelve Directors
Item No.3 -Election of One Audit & Supervisory Board Member
Item No.4 -Grant of Bonus to Directors:
(Materials delivered pursuant to Article 437 and Article 444 of the Companies Act)
BUSINESS REPORT
19
CONSOLIDATED FINANCIAL STATEMENTS
41
FINANCIAL STATEMENTS
43
AUDIT REPORTS
45
Our Ultra-
Small Satellite
CE-SAT-I
was su““essfully laun“he”!
On Friday, June 23, 2017 (JST) at 12:59 pm, the ultra-
small satellite “
CE-SAT-I
”
which
we had designed was successfully launched from the Satish Dhawan Space Centre in
India on the Polar Satellite Launch Vehicle of the Indian Space Research Organization
(Picture 1).
After a flight of 17 minutes and 1 second, the satellites achieved a polar Sun Synchronous
Orbit of 505 km (Picture 2: Photographs taken by a camera in the rocket as to the
separation of the satellite from the rocket).
The first communication with the Akagi ground station was at 8:25 pm on the same day
and we confirmed that the satellite was operating properly. The satellite is passing over
Japan twice a day, each in the morning and at night and communicates with the ground
station located in our Akagi plant. The satellite has succeeded in taking high-resolution
images of the ground (Picture 3, 4 and 5).
CE-SAT-I is an ultra-small satellite with a size of 50 × 50 × 80 [cm], mass 65 [kg],
equipped with a computer manufactured by Canon Electronics Inc. and Canon EOS 5D
Mark III camera. It has the ability to distinguish 1 m objects on the ground from the
space.
Picture 1:Launch of PSLV Credit：ISRO/Antrix
“
CE-SAT-I
”
News
CE-SAT-I
re“eive” "Goo” ）esign Awar”
2017"!
On November 2017, “
CE-SAT-I
”
received the Good Design Award in the category of
“
Social
Infrastructure Systems and Infrastructure.
”
It was appreciated that the information
obtained by observing the earth by Canon EOS 5D Mark III in the satellite was utilized
to drive industrial growth and enrich lives and, as a whole,
contribute to a “Better Living”
(Picture 6). The Good Design Award is an award organized by Japan Institute of Design
Promotions and is a uniquely comprehensive platform for design evaluation and advocacy.
CE-SAT-I was exhibited at "GOOD DESIGN EXHIBITION 2017" held in Tokyo Midtown
(Minato-ku, Tokyo) for 5 days from 1
stto 5
thof November (Picture 7). CE-SAT-I was
exhibited at the Canon booth, a special booth offered to the award-winning top ranked
companies, along with the award-winning products of other Canon Group companies.
(Picture:8).
T
he future of
CE-SAT-I
On November 15, 2017, we obtained an approval from the Prime Minister of Japan on
the use of the satellite remote sensing system mounted in CE-SAT-I which complied with
the requirement of "Law Concerning the Proper Handling of Satellite Remote Sensing
Records (provisional
translation)". CE-SAT-I was the first private domestic satellite
obtaining the said approval.
Now, we are conducting demonstration experiments such as communication between the
satellite and the ground stations and taking photographs of the earth from the space.
From now on, we will prepare for the commercialization of our space business, including
an external sale of satellite bodies, images photographed by the satellite and main
components and parts of the satellite. We would appreciate your warm attention to Canon
Electronics' commitments to the space business.
Picture 6: Certificate of commendation
Picture 7: GOOD DESIGN EXHIBITION 2017
document and the Japanese original, the original shall prevail.)
Notice of Convocation of the Ordinary General Meeting of
Shareholders for the 79
thBusiness Term
March 5, 2018
To our shareholders:
Hisashi Sakamaki
President & CEO
CANON ELECTRONICS INC.
1248 Shimokagemori, Chichibu-shi, Saitama
Notice is hereby given that the Ordinary General Meeting of Shareholders for the 79th
Business Term of CANON ELECTRONICS INC. (the “Company”) will be held as
described below and that you are invited to attend the Meeting.
If you do not expect to attend the Meeting, you may exercise your voting rights in writing.
After reviewing the following Reference Documents for General Meeting of Shareholders,
please indicate your for/against for each of the propositions on the enclosed Voting Form,
and return it to us so that it reaches us by
no later than 5:00 p.m. on March 27, 2018
(Tuesday), (Japan time)
.
_____________________________________________________________________________
1
Date and Time
9:00 a.m. on March 28, 2018 (Wednesday)
(Japan time)
2
Venue:
Meeting Room at Misato Plant of the Company
3
Purpose of the Meeting
Matters to be reported:
1. Reports on the contents of the Business Report and the Consolidated Financial
Statements for the 79th Business Term (from January 1, 2017 to December 31,
2017), and reports on the Auditing Results of Accounting Auditor and Audit &
Supervisory Board regarding the Consolidated Financial Statements
2. Reports on the content of the Financial Statements for the 79th Business Term
(from January 1, 2017 to December 31, 2017)
Matters to be resolved upon:
Propositions:
Item No.1 -
Dividend from Surplus
Item No.2 -
Election of Twelve Directors
Item No.3 -
Election of One Audit & Supervisory Board Member
Item No.4 -
Grant of Bonus to Directors
4
Guidance Notes on the Exercise of Voting Rights
Please refer to the “Guidance Notes on the Exercise of Voting Rights” on the following
page (written in Japanese only).
Notes:
1. Upon attending the Meeting, please present the enclosed Voting Form to the receptionist at the place of the Meeting.
2. Any changes in the matters described in Reference Documents for General Meeting of Shareholders, Business Report, Financial Statements and Consolidated Financial Statements will be posted on our website on the Internet (written in Japanese only).
Voting right at shareholders meeting is an important right of the shareholders. You are
kindly requested to exercise the voting rights after reviewing the Reference Document
for General Meeting of Shareholders. There are two ways to exercise the voting rights.
Exercise of Voting Rights by Attending the Meeting
Please bring and present the enclosed Voting Form to the receptionist at the place of the
Meeting. Also please bring this Convocation Notice for the 79th Business Term with you.
Date and time of the Meeting: 9:00 a.m. on
March 28, 2018 (Wednesday)
Place of the Meeting: Meeting Room at Misato Plant of the Company
Exercise of Voting Rights in Writing by Post
Please indicate your for/against for each of the propositions on the enclosed Voting Form
and return it to us by post without a stamp.
Deadline: Reach us by
no later than 5:00 p.m. on March 27, 2018 (Tuesday)
(Japan time)
Disclosure on the Internet
Following information are not described in this Convocation Notice for the 79th Business
Term, since those information are posted on the Internet based on the provisions of the
relevant laws and the Article 14 of the Company Articles of Incorporation.
1. Notes to Consolidated Financial Statements
2. Notes to Financial Statements
3. Statement of changes in Net Asset to Consolidated Financial Statements
4. Statement of changes in Net Asset to Financial Statements
ADDRESS http://www.canon-elec.co.jp/
(written in Japanese only)
Reference Documents for General Meeting of Shareholders
Item No.1: Dividend from Surplus
The basic policy of the Company is, for the purpose of expanding a shareholders value to
the future, to enhance an internal reserve and to maintain a stable return to shareholders,
mainly in the form of a dividend, by actively developing business and strengthening
corporate constitution.
After comprehensively considering the above policy, and also in order to express gratitude
to our shareholders for their continuous support, we propose a term-end dividend of 40
yen per share, as follows.
As we have already paid an interim dividend of 30 yen per share, the full-year dividend
will be 70 yen per share, which is the increase of 10 yen compared to the previous term.
i) Kind of dividend property:
Cash
ii) Matters regarding allocation of the dividend property and its total amount:
40 yen per one common share of the Company
Total amount of dividend 1,632,627,760 yen
(Reference 79th Business Term) The full-year dividend :
70 yen per share
Dividend Payout Ratio 36.9 %
iii) Effective date of the distribution of the dividend from surplus:
March 29, 2018
Reference)
79th Business Term
(from January 1, 2017 to December 31, 2017)
the interim
the term-end
the full-year
Dividends Per Share
[yen]
30
40
70
Dividend Payout Ratio
[%]
30.8
43.4
36.9
Total amount of dividend
The terms of office of all of the twelve Directors will expire at the end of this Meeting.
Therefore, we propose the election of twelve Directors.
The candidates for the Directors are as follows:
Candidate
No. Name Positions and business in charge in the Company
Attendance Status at Board of Directors
Meetings
1 Hisashi Sakamaki President & CEO Re-nominated 100％
16 held, 16 attended
2 Takeshi Hashimoto
Executive Vice President and Director, Group Executive of LBP Group and Business Machine Components Group
Re-nominated 94％
16 held, 15 attended
3 Takashi Ehara
Senior Managing Director, Group Executive of Magnetics & Components Group
Re-nominated 100％
16 held, 16 attended
4 Takumi Ishizuka
Senior Managing Director,
Group Executive of Corporate Administration Center and General Manager of Human Resources Management Div.
Re-nominated 100％
16 held, 16 attended
5 Tadashi Arai
Managing Director,
Deputy Group Executive of Business Machine Components Group and Group Executive of Motor Group and Senior General Manager of Production Engineering Center
Re-nominated 100％
16 held, 16 attended
6 Zhou Yaomin
Managing Director,
Group Executive of Materials Research Center & General Manager of Material Research Div.
Re-nominated 100％
16 held, 16 attended
7 Takeshi Uchiyama
Managing Director,
President & Representative Director of Canon Electronics Technology Inc.
Re-nominated 100％
16 held, 16 attended
8 Junichi Takahashi Director,
Group Executive of Nickel Alloy Group Re-nominated
100％
16 held, 16 attended
9 Toshio Uetake
Director,
Senior General Manager of Procurement Center and Group Executive of EI Group
Re-nominated 100％
16 held, 16 attended
10 Masakazu Toyoda Director
Re-nominated Candidate for Outside Director Independent Director 81％
16 held, 13 attended
11 Katsuhiko Utsumi Director
Re-nominated Candidate for Outside Director Independent Director 94％
16 held, 15 attended
Candidate No.
1
Brief personal record, position, business in charge and important concurrent postsHisashi Sakamaki
Re-nominated
Date of birth: Mar. 6, 1940
Number of the Company’s shares held: 12,200 shares
As of
Jan. 1967: Entered Canon Inc. Mar. 1989: Director
Feb. 1991: In charge of Global Corporate Planning
May 1992: Group Executive of Production Headquarters and in charge of Environmental Assurance
Mar. 1996: Managing Director
Audit & Supervisory Board Member of the Company Mar. 1999: President & CEO of the Company (present) [Important concurrent posts]
Outside Director of Fujitsu General Limited Outside Director of YAOKO CO., LTD.
Reasons for being selected as a candidate
Mr. Hisashi Sakamaki had been leading the development, design, production and environmental conservation divisions of Canon Inc for many years. After he joined, he has been managing the Company as President and CEO with methods of environmental management, and made the Company a highly profitable company with a net profit of over 10%. The Company has selected him as a candidate for director upon determining that his wealth of expertise, ability and insight as a management are vital to the Company’s important decision making and supervision of managerial executions.
Candidate No.
2
Brief personal record, position, business in charge and important concurrent postsTakeshi Hashimoto
Re-nominated
Date of birth: Sep. 12, 1962
Number of the Company’s shares held: 6,100 shares
As of
Apr. 1985: Entered Canon Inc.
May 2002: General Manager of LBP Administration Div., LBP Group of the Company
Apr. 2004: Deputy Group Executive of LBP Group and General Manager of LBP Administration Div.
Mar. 2007: Director
Group Executive of LBP Group (present) Mar. 2009: Managing Director
Jan. 2012: Group Executive of Business Machine Components Group (present)
Mar. 2012: Senior Managing Director
Mar. 2013: Executive Vice President & Director (present)
Nov. 2013: Senior General Manager of Functional Components Business Promotion Center
Dec. 2013: Senior General Manager of Production Engineering Center
Reasons for being selected as a candidate
Takashi Ehara
Re-nominated
Date of birth: Feb. 10, 1957
Number of the Company’s shares held: 3,900 shares
As of
Apr. 1980: Entered the Company
Jan. 2002: General Manager of Magnetics & Components Sales Div., Magnetics & Components Group
Mar. 2007: Director
Group Executive of Magnetics & Components Group and General Manager of Magnetics & Components Sales Div. Apr. 2008: Group Executive of Magnetics & Components Group Mar. 2009: Managing Director
Mar. 2013: Senior Managing Director (present)
Oct. 2013: Group Executive of Magnetics & Components Group and General Manager of Magnetics & Components Design Div. Mar. 2016: Group Executive of Magnetics & Components Group
(present)
Reasons for being selected as a candidate
Mr. Takashi Ehara has been leading the camera related division over the years and contributed greatly to the Company. He serves a position as a senior managing director. The Company has selected him as a candidate for director upon determining that his extensive expertise, wide range of experience in his duty and his good personality and deep insight are vital to further increase the corporate value of the Canon Electronics Group.
Candidate No.
4
Brief personal record, position, business in charge and important concurrent postsTakumi Ishizuka
Re-nominated
Date of birth: Dec. 7, 1958
Number of the Company’s shares held: 4,200 shares
As of
Apr. 1982: Entered the Company
Jan. 2001: General Manager of Human Resources Management Div. Apr. 2004: General Manager of Human Resources Management Div. and
Facilities Administration Div. Mar. 2005: Director
Jan. 2006: General Manager of Human Resources Management Div. Apr. 2008: Senior General Manager of Human Resources Management
Center
Mar. 2009: Managing Director Jan. 2013:
Mar. 2016: Aug. 2017:
Senior General Manager of Human Resources Management Center and General Manager of Finance & Accounting Div. Senior Managing Director (present)
Group Executive of Corporate Administration Center and General Manager of Human Resources Management Div. (present)
Reasons for being selected as a candidate
Candidate No.
5
Brief personal record, position, business in charge and important concurrent postsTadashi Arai
Re-nominated
Date of birth: Jan. 19, 1958
Number of the Company’s shares held: 2,450 shares
As of
Apr. 1981: Entered the Company
Apr. 2003: General Manager of Business Machine Components Administration Div., Business Machine Components Group Apr. 2005: Plant Manager of Business Machine Components Plant 3,
Business Machine Components Group
Dec. 2007: Plant Manager of Business Machine Components Plant 4, Business Machine Components Group
Mar. 2011: Director
Jul. 2011: Deputy Group Executive of Business Machine Components Group and Plant Manager of Business Machine Components Plant 2
Oct. 2012: Deputy Group Executive of Business Machine Components Group and Group Executive of Motor Group
Jun. 2015: Deputy Group Executive of Business Machine Components Group and Group Executive of Motor Group and Senior General Manager of Production Engineering Center (present) Mar. 2016: Managing Director (present)
Reasons for being selected as a candidate
Mr. Tadashi Arai has been leading the motor manufacturing division over the years and contributed greatly to the Company. He serves a position as a managing director. The Company has selected him as a candidate for director upon determining that his extensive expertise, wide range of experience in his duty and his good personality and deep insight are vital to further increase the corporate value of the Canon Electronics Group.
Candidate No.
6
Brief personal record, position, business in charge and important concurrent postsZhou Yaomin
Re-nominated
Date of birth: Nov. 11, 1962
Number of the Company’s shares held: 1,900 shares
As of
Apr. 2000: Entered the Company
Feb. 2008: General Manager of Materials Research Div., Materials Research Center, Central Research Laboratory
Mar. 2008: Group Executive of Materials Research Center, Central Research Laboratory and General Manager of Materials Research Div.
Mar. 2009: Group Executive of Materials Research Center and General Manager of Materials Research Div. (present)
Mar. 2012: Mar. 2016:
Director
Managing Director (present)
Reasons for being selected as a candidate
Takeshi Uchiyama
Re-nominated
Date of birth: Dec. 22, 1964
Number of the Company’s shares held: 6,500 shares
As of
Apr. 1987: Entered Asia Computer Inc. (present Canon Electronics Technology Inc.)
Apr. 1998: General Manager of Sales Promotion Div. Jun. 1999: Director, Group Executive of Sales Group
Apr. 2006: Managing Director, Executive Officer, Group Executive of SI Group and Deputy Group Executive of Sales Group
Dec. 2007: Senior Managing Officer, Group Executive of System Integration Group
Mar. 2008: President & Representative Director (present) Mar. 2010:
Mar. 2017:
Director of the Company (present) Managing Director (present) [Important concurrent posts]
President & Representative Director of Canon Electronics Technology Inc.
Reasons for being selected as a candidate
Mr. Takeshi Uchiyama has been leading the IT related business over the years and contributed greatly to the Company. He served a position as Managing director of the Company and the president of the subsidiary. The Company has selected him as a candidate for director upon determining that his extensive expertise, wide range of experience in his duty and his good personality and deep insight are vital to further increase the corporate value of the Canon Electronics Group.
Candidate No.
8
Brief personal record, position, business in charge and important concurrent postsJunichi Takahashi
Re-nominated
Date of birth: Jan. 1, 1960
Number of the Company’s shares held: 2,350 shares
As of
Apr. 1982: Entered the Company
Oct. 2004: General Manager of Materials Research Div., Material Research Center
Feb. 2008: Deputy General Manager of Nickel Alloy Business Promotion Div.
Mar. 2008: General Manager of Nickel Alloy Business Promotion Div. Apr. 2011: Group Executive of Nickel Alloy Group (present) Mar. 2013: Director (present)
Reasons for being selected as a candidate
Candidate No.
9
Brief personal record, position, business in charge and important concurrent postsToshio Uetake
Re-nominated
Date of birth: Jun. 17, 1960
Number of the Company’s shares held: 1,000 shares
As of
Apr. 1981: Entered Canon Inc.
May 2008: President of Canon Engineering Hong Kong
Apr. 2011: General Manager of Procurement Management Planning Div., Global Procurement Management Center, Global Procurement Headquarters of Canon Inc.
Apr. 2012: Senior General Manager of Procurement Center of the Company
Feb. 2013: Mar. 2016:
Senior General Manager of Procurement Center and Group Executive of EI Group (present)
Director (present)
Reasons for being selected as a candidate
Mr. Toshio Uetake has been leading the procurement and EI (electronic interconnect) division of the Company, and contributed greatly to the Company. He served a position as director of the Company. The Company has selected him as a candidate for director upon determining that his extensive expertise, wide range of experience in his duty and his good personality and deep insight are vital to further increase the corporate value of the Canon Electronics Group.
Candidate No.
10
Brief personal record, position, business in charge and important concurrent postsMasakazu Toyoda
Re-nominated
Candidate for Outside Director Independent Director
Date of birth: Jun. 28, 1949
Number of the Company’s shares held: 0 shares
As of
Apr. 1973: Entered Ministry of International Trade and Industry
Aug. 2003: Director-General, Commerce and Information Policy Bureau of Ministry of Economy, Trade and Industry
Jul. 2006: Director-General, Trade Policy Bureau Jul. 2007: Vice-Minister for International Affairs
Aug. 2008: Secretary-General, Secretariat of Strategic Headquarters for Space Policy, Cabinet Secretariat
Special Advisor to the Ministry of Economy, Trade and Industry
Nov. 2008: Special Advisor to the Cabinet
Jun. 2010: Outside Statutory Auditor of Murata Manufacturing Co., Ltd. Jul. 2010: Chairman & CEO of The Institute of Energy Economics,
Japan (The organization was changed from incorporated association to general incorporated foundation under the same English name) (present)
Jun. 2011: Outside Corporate Auditor of Nitto Denko Corporation (present)
Mar. 2015: Jun. 2016:
Outside Director of the Company (present)
Outside Director of Murata Manufacturing Co., Ltd. (present) [Important concurrent posts]
Chairman & CEO of The Institute of Energy Economics, Japan Outside Director of Murata Manufacturing Co., Ltd.
Outside Corporate Auditor of Nitto Denko Corporation
Reasons for being selected as a candidate
Katsuhiko Utsumi
Re-nominated
Candidate for Outside Director Independent Director
Date of birth: Jul. 15, 1946
Number of the Company’s shares held: 0 shares
Apr. 1969: Entered Furukawa Electric Co., Ltd.
Jun. 1993: General Manager of Electronic Device Sales Department, Sales & Marketing Division
Jun. 1997: General Manager of the Chubu Branch
Jun. 2000: Director, General Manager of the Chubu Branch Jun. 2003: Managing Director and Corporate Senior Vice President Apr. 2004: Managing Director and Corporate Senior Vice President,
CMO and General Manager of the Export Security Administration Department
Jun. 2005: President and Representative Director of The Furukawa Battery Co., Ltd.
Jun. 2012: Senior Adviser
Mar. 2015: Outside Director of the Company (present) Outside Director of Lilycolor Co., Ltd. (present)
Apr. 2015: President and Representative Director of JATEC Co., Ltd. [Important concurrent posts]
Outside Director of Lilycolor Co., Ltd.
Reasons for being selected as a candidate
Mr. Katsuhiko Utsumi has a high-level expertise and a wealth of experience in management of the company for many years and also serves the outside directors of the other companies. The Company has selected him as a candidate for outside director upon determining that the Company is able to obtain from him valuable comments and suggestions for company management.
Candidate No.
12
Brief personal record, position, business in charge and important concurrent postsToshikazu Togari
Newly nominated
Candidate for Outside Director Independent Director
Date of birth: Nov. 28, 1947
Number of the Company’s shares held: 0 shares
As of
Jul. 1971: Entered Ministry of Labour
Jul. 1999: Deputy Vice-Minister of Minister’s Secretariat, Ministry of Labour Jan. 2001: Deputy Vice-Minister of Minister’s Secretariat, Ministry of
Health, Labour and Welfare
Aug. 2002: Director-General of Employment Security Bureau Aug. 2003: Vice-Minister for policy coordination
Jul. 2004: Vice-Minister
Oct. 2007: President of Japan Organization for Employment of the Elderly and Persons with Disabilities
Apr. 2008: Visiting Professor of Hosei Graduate School of Regional Policy Design (present)
Jun. 2011: Chairman and Representative Director of Zaikei-Jutaku-kinyu Co., Ltd. (present)
May 2014: Chairman of Nihon-Kango-Kasei-Shokai-Jigyo Association (present)
[Important concurrent posts]
Visiting Professor of Hosei Graduate School of Regional Policy Design Chairman and Representative Director of Zaikei-Jutaku-kinyu Co., Ltd. Chairman of Nihon-Kango-Kasei-Shokai-Jigyo Association
Reasons for being selected as a candidate
Mr. Toshikazu Togari has been served, over the years, a key position such as Vice-Minister of Ministry of Health, Labor and Welfare and has a wealth of experience and a sophisticated and wide-range of expertise in the field of employment and labor. He also engages in the
management of the company and the university professor etc. The Company has selected him
S
pecial matters concerning candidates for the Directors
1. Special interest in the CompanyNone of the candidates for the Directors have any special interest in the Company.
2. Violation of Law by the company where candidate for Director, Mr. Katsuhiko Utsumi has a concurrent post and his response to that issue.
Lilycolor Co., Ltd.where Mr. Katsuhiko Utsumi serves as an outside director, received a cease and desist order and an order for payment of surcharge from the Fair Trade Commission, under the provisions of an “Act on Prohibition of Private Monopolization and Maintenance of Fair Trade”. He has been kept working on calling attention of the importance of the compliance and the internal control systems etc. in the company and, after the violation was known to him, based on his experience, he recommended to set up a third party committee in order to make a survey on the actual facts and gave various opinions to further strengthen internal control system so as to prevent recurrence of the events.
3. Candidate for the Outside Directors (Messrs. Toyoda, Utsumi and Togari)
(1) Mr. Masakazu Toyoda, Mr. Katsuhiko Utsumi and Mr. Toshikazu Togari are candidates for
Outside Directors defined by Item 7, Paragraph 3, Article 2 of the Enforcement Regulations of the Companies Act.
(2) The Company regards Mr. Masakazu Toyoda, Mr. Katsuhiko Utsumi and Mr. Toshikazu
Togari as Independent Directors who satisfy the “Independence Standards for Independent Outside Directors/Audit & Supervisory Board Members” as stipulated by the Company (reference below).
(3) Mr. Masakazu Toyoda and Mr. Katsuhiko Utsumi will have served for three years as Outside
Directors of the Company as of the end of this Meeting.
(4) The Company has entered into contracts with Mr. Masakazu Toyoda and Mr. Katsuhiko
Utsumi limiting the amount of their damage compensation liabilities defined in Paragraph 1, Article 423 of the Companies Act to the limit prescribed by the relevant laws and regulations. Should they be elected, the Company will continue the aforementioned contracts with them. Should Mr. Toshikazu Togari be elected, the Company will enter into contract with him limiting the amount of their damage compensation liabilities defined in Paragraph 1, Article 423 of the Companies Act to the limit prescribed by the relevant laws and regulations.
(5) The Company has notified Mr. Masakazu Toyoda and Mr. Katsuhiko Utsumi as independent
Supervisory Board Members” of Canon Electronics Inc.”
Canon Electronics Inc. hereby establishes the “Independence Standards for Independent Outside
Directors/Audit and Supervisory Board Members” in order to clarify the standards for ensuring
independence of Independent Outside Directors/Audit and Supervisory Board Members of Canon Electronics Inc..
Independence Standards for Independent Outside Directors/Audit and Supervisory Board Members Canon Electronics Inc. deems that a person who satisfies the requirements for Outside Directors/Audit and Supervisory Board Members prescribed by the Companies Act of Japan, and meets the independence criteria set by Securities Exchanges in Japan, and does not fall into any of
the items below, is an “Independent Outside Director/Audit and Supervisory Board Member” (a person
who is independent from the management of Canon Electronics Inc. and unlikely to have conflicts of interest with general shareholders).
1. A person/organization for which Canon Electronics Group (Canon Electronics Inc. and its subsidiaries; hereinafter the same) is a major client, or a major client of Canon Electronics Group, or an executing person of such organization or client
2. A major lender to Canon Electronics Group, or an executing person of such lender
3. A large shareholder of Canon Electronics Inc., or an executing person of such shareholder
4. A person/organization receiving large amounts of contributions from Canon Electronics Group, or an executing person of such organization
5. A consultant, accounting professional or legal professional who has received a large amount of money or other properties from Canon Electronics Group, other than as compensation for being a director/Audit and Supervisory Board Member (if the recipient is a corporation, partnership or any other organization, this item applies to any person belonging to said organization.)
6. A certified public accountant belonging to the audit firm engaged to conduct the statutory audit of Canon Electronics Group (including any such accountant to whom this item has applied in the last 3 business years)
7. An executing person of another company in cases where an executing person of Canon Electronics Group is an outside director/audit and supervisory board member of such other company
8. An immediate family member (spouse and a relative within the second degree of kinship) of any of the persons listed in each of items 1 to 7; provided, however that the persons to whom this is applicable shall be limited to key executing persons such as directors, executive officers of companies and partners of advisory firms
Notes:
* In item 1, “major” means in cases where the total amount (for any business year during the last 3 business years) of transactions between Canon Electronics Group and such client exceeds 1% of the consolidated sales of Canon Electronics Group or such client.
* In item 2, “major” means in cases where the debt outstanding exceeds 1% of the consolidated total assets of Canon
Electronics Inc. for any business year during the last 3 business years.
* In item 3, “a large shareholder” means a shareholder who directly or indirectly holds 5% or more of the total voting rights of Canon Electronics Inc.
* In item 4, “a large amount” means in cases where the total amount of contributions exceeds JPY 12 million (in cases
where the recipient is an individual) or 1% of the annual gross income of such recipient (in cases where the recipient is an organization), for any business year during the last 3 business years of Canon Electronics Inc.
* In items 1 to 4 and 7, an “executing person” means an executive director, advisory director, executive officer and employee including manager (in items 1 to 4, including a person to whom this item has applied in any business year during the last 3 business years).
Item No.3: Election of One Audit & Supervisory Board Member
The Audit & Supervisory Board Member, Mr. Shunji Onda will resign at the end of this Meeting. Therefore, we propose the election of one Audit & Supervisory Board Member.
The candidate for the Audit & Supervisory Board Member is as follows.
Prior to our proposal of this item, we have already obtained the consent of the Audit & Supervisory Board.
Candidate Brief personal record, position and important concurrent posts
Junichiro Hayashi
Newly nominated
Date of birth: Oct. 27, 1957
Number of the Company’s shares held:
0 shares
As of
Apr. 1981: Entered Canon Inc.
Jul. 2011: General Manager of Quality Assurance Div. of the Company (present)
Jul. 2014: Managing Director (present)
Reasons for being selected as a candidate
As Mr. Junichiro-Hayashi has been leading the Quality Assurance Division of the Company, he has an insight and experience on each business unit of the Canon Electronics Group. The Company has selected him as a candidate for Audit & Supervisory Board Member upon determining that the Company judges that his good personality and deep insight is vital to the effective audits of the Canon Electronics Group.
Note: There is no special interest between a candidate and the Company.
Item No.4: Grant of Bonus to Directors
BUSINESS REPORT
(From Jan. 1, 2017 to Dec. 31, 2017)1
Current Conditions of the Canon Electronics Group
(1) Business Progress and Results
The world economy in the current business term as a whole showed gradual recovery including the growth of the economy in the United States which was recovered moderately by the growing of consumption and increase in number of employees. However, there were still uncertainties about the future prospect of the economies and the politics in China and emerging Asian countries and the political situations in the European countries etc. With respect to the Japanese economy, thanks to increase of corporate profits, improvement of employment situations and stable consumer price, moderate recovery trend continued about the personal consumption.
As for the currency, both the US dollar and the Euro had a rather stronger yen appreciation in the 1st quarter and a weaker yen depreciation in the 2nd quarter compared with the previous term.
Turning to the overview of each business unit of the Canon Electronics Group, in the digital camera market, there was an increasing demand for products that could easily take high-resolution photographs and consequently sales of Mirror-less cameras were performing well. However, due to the influence of smartphone, tough situations continued in the market as a whole.
Document scanner market continued to expand, mainly in emerging countries, due to an increase in demand for digitization of documents and diversification and sophistication of the usage methods of the scanners. Market was gradually expanding in the information related market due to revitalization of the motivations to invest in new fields, such as IoT (Internet of Things), AI (Artificial Intelligence) and Big Data fields, in addition to the investment in IT field.
Under these circumstances, in addition to actively promoting sales of existing products, we strongly promoted order taking activities by adding in the product line-up new products such as “DR-M260” which supports a large number of scan tasks of up to 80 paper feeds by mounting a newly developed DR processor which has made high-speed scanning and the improved image quality possible, and
In addition, we are now working on space related fields as a new business. On Friday, June 23, 2017 (JST), our ultra-small satellite “CE-SAT-I” was successfully launched and put into orbit from the Satish Dhawan Space Centre in India. In addition to the various demonstration experiments of the respective functions, we were successful in taking high-resolution photographs of the ground by a photographing system which were consisted of a telescope and a Canon EOS 5D Mark III camera. It enabled us to achieve a ground sampling distance of 1 m. Further, we obtained an approval from the Prime Minister of Japan on the use of the satellite remote sensing system equipment complying with the requirement of "Law Concerning the Proper Handling of Satellite Remote Sensing Records (temporary translation)". We will accelerate our preparation for the commercialization of our space business, including an external sale of satellite bodies, photographed images and main components and parts of the satellite manufactured in-house.
Net Sales 83,769 million yen
Up 0.6% from the previous term
Operating Profit 9,605 million yen
Up 18.9% from the previous term
Ordinary Profit 9,886 million yen
Up 24.2% from the previous term
Profit Attributable to Owners of Parent 7,739 million yen
Up 39.4% from the previous term
Reference Canon Electronics Group in Numbers
ROE ROA
9.1% 9.4%
Equity Ratio Ordinary Profit Ratio
81.2% 11.8%
Facilities Investment R&D Expenditure
1,892 million yen 4,600 million yen Dividend Payout Ratio Number of Employees
Interchangeable Lens Shutter Unit for digital camera
Laser Scanner Unit
(Main Products)
Production and Sale of Shutter Unit, Aperture Unit, Magnetic Sensor, Laser Scanner Unit,
Mounting of Printed Circuit Board
Consolidated Net Sales
47,650
million yen Up 7.9% from the previous term
Overview of the Term
As for the Component Division, in the digital camera market, there was an increasing demand for products that could easily take high-resolution photographs, however, due to the influence of smartphones, tough situations continued in the market as a whole. Under these circumstances, we made proactive effort in taking orders especially for the main components such as shutter unit and aperture unit for digital cameras and sales were steadily increased.
With respect to Laser Scanner Unit for Laser Printers and Multifunction Printers, we made continuous efforts to increase productivity and increase the ratio of in-house components, thus reducing cost-of-sale. As the launch of new products, sales were steadily increased.
Mobile settlement process terminal “CA-P1” which supported credit card payment in collaboration with tablets etc.
Robust, reliable, high-speed
“DR-M260” document scanner
Digital Information Equipment Division
(Main Products)
Production and Sale of Document Scanner, Handy Terminal, Laser Printer
Consolidated Net Sales
26,495
million yen Down 12.4% from the previous term
Overview of the Term
For Document Scanners, we made continuous efforts to expand the sales of imageFORMULA series by enhancing product lineup from low speed to high speed scanners.
In the current term, as the release of new document scanners and the check scanners for overseas, sales in Europe and the US increased and total sales also increased.
For Handy Terminals, area of services and usage in business opportunity have expanded, because we introduced new auto recognition technologies and established differentiation technologies from smartphones and tablets. Although sales of the main body of the Handy Terminal were increased in the current term, sales of related products such as batteries and mobile printers fell compared to the previous term, overall sales decreased.
(Main Products)
Business Analysis Service, Information Security Countermeasure Service, Business Card
Management
Service,
Customer
Information
Management
Service,
System
Development/Maintenance/Implementation, Factory Automation Product, Environment
Related
Product,
Small
Injection
Molding
Machine,
3D
Milling
Machine,
Sphygmomanometer, Hydrogen Peroxide Gas Sterilizer.
Consolidated Net Sales
9,623
million yen Up 8.6% from the previous term
Overview of this Term
In the Information Related Business, we made proactive sales activities in information security countermeasure service SML , business analysis service Log Management , business card management service UltimaBlue and package software for medical institution Medical Dictionary .
In particular, we strove to acquire infrastructure-related projects, such as building servers and networks, and acquiring system development, system maintenance and system operations.
We also made efforts to expand sales, especially of entrance® Banking , information platform and database for financial institutions, and SCHOOL AID® , educational affairs management for high school, thus sales increased.
In Environment Related Product Business, we made proactive sales activities by positioning 3D Milling Machine MF-150A Mark II , Food Waste Decomposer Land care 16 II , Small Electric Injection Molding Machine LS-715 series as our priority products.
Overall sales increased due the increase of number of new orders for the Factory Automation Equipment and increase in sales in the medical fields because we started production of hydrogen peroxide gas sterilizer and the apparatus for measuring blood pressure following the production transfer from other Canon Group company.
Also, as for 3D Milling Machine for the dental market, we are activating sales promotion activities in order for the machine to be released during 2018.
Small 3D Milling Machine for dental market
(2)
Facilities Investment
The investment in facilities by the Canon Electronics Group during this term totaled 1,892 million yen, which are mainly investment in the tooling of new products and equipment renewal etc.
(3) Business Challenges and Countermeasures
The world economy in the current business term was, as a whole, showing gradual recovery, however, there were still uncertainties about the future prospect of the economies and politics in China and emerging Asian countries and the political situations in the European countries. With respect to the Japanese economy, as corporate profits increased and employment situation improved, personal consumption showed moderate recovery. In the meanwhile, the atmosphere surrounding our products still continues to be severe because of the shift to low-priced products due to intense price competition.
Under these circumstances, we will work on the following subjects.
Entry into future growth fields
We are now moving forward with entry into various growth fields. In the space-related fields, following the successful launch of the ultra-small satellite which we designed, we succeeded in taking high-resolution photographs through our demonstration experiments. In the medical fields, we started production of an apparatus for measuring blood pressure, a hydrogen peroxide gas sterilizer, and a medicine packaging machines following the transfer of production. We also accelerate our preparation for the release of 3D Milling Machine for dental market. Further, in the agricultural field, we are preparing to operate a fully automated plant factory.
As we work on new businesses, we will concentrate the full potential of all our employees more than ever and strongly promote the creation of quality “Shitsu no Sozo” (aiming to become a high-quality company with world-class ethics, knowledge, technology and ability to take actions).
Improvement in the products quality and R&D capabilities
R & D department will carry out "efficient product development" that accurately captures the needs of users and incorporating new ideas aiming to improve product quality, by enhancing information exchange among divisions more closely. Furthermore, in order to achieve "improvement in the quality of R & D capabilities", and in order for each of our employees to act to become a leading expert in their field, we will try to make necessary investment and develop and utilize human resources and create products that will make all customers happy.
Pursuit of production system matching business, products and production plant
Net Sales [Millions of yen]
75th 76th 77th 78th 79th [This term]
75th 76th 77th 78th 79th [This term]
Ordinary Profit Ratio [%]
Ordinary Profit
Equity Ratio / ROE [%]
Profit Attributable to Owners of Parent Equity Ratio ROE
EPS [yen]
[Millions of yen]
Ordinary Profit / Profit Attributable to Owners of Parent
BPS [yen]
75th 76th 77th 78th 79th [This term] 75th 76th 77th 78th 79th
[This term]
75th 76th 77th 78th 79th [This term]
Status of Assets and Earnings
Consolidated
75th Business Term 76th Business Term 77th Business Term 78th Business Term 79th Business Term قThis termك Net Sales
(millions of yen)
98,016 95,482 89,373 83,290 83,769
Ordinary Profit
(millions of yen)
10,877 10,524 10,677 7,959 9,886
Ordinary Profit Ratio
(％) 11.1 11.0 11.9 9.6 11.8
Profit Attributable to
Owners of Parent
(millions of yen)
7,249 7,377 6,951 5,553 7,739
Profit Ratio
(％) 7.39 7.72 7.77 6.66 9.24
BPS
(yen) 1,771.12 1,860.60 1,922.83 1,995.58 2,152.50
EPS
(yen) 174.26 178.77 170.31 136.06 189.61
Total Assets
(millions of yen) 96,013 101,542 101,780 103,171 108,221
Net Assets
(millions of yen) 73,953 75,996 78,539 81,515 87,985
Equity Ratio
(％) 76.7 74.8 77.1 78.9 81.2
ROE
(%) 10.2 9.9 9.0 6.9 9.1
ROA
(%) 11.6 10.7 10.5 7.8 9.4
Dividend Payout Ratio
(%) 34.4 33.6 35.2 44.1 36.9
Number of Employees
Relation with Parent Company
Parent Company
Name
Location Activities
Number of Voting Rights (Ratio of Voting
Rights)
Relation with the Company
Canon Inc.
Ohta-ku Tokyo
Manufacture and sale of business machines, cameras and optical products
225,006 (55.3%)
The company manufactures camera units , laser printer and laser scanner units for the Parent Company’s products
Note: In transaction with the Parent company, the terms are negotiated and determined by presenting the preferred prices from the Company taking into account market prices and total cost.
Thus, the board of directors assesses that the Company’s profit is not harmed in the transactions with the Parent company.
Principal Subsidiaries
Company Name Capital Stock
Ratio of Voting Rights of the Company
Main Activities
Canon Electronics Malaysia) Sdn. Bhd.
22,500
(thousands of M$) 100.0％
Manufacture and sale of precision machineries
Canon Electronics Vietnam Co., Ltd.
54,000
(thousands of US$) 100.0％
Manufacture and sale of electronic machineries
Canon Electronics Business Systems Inc.
10
(millions of yen) 100.0％ Sale of business machines etc.
Canon Esquisse System Inc.
100
(millions of yen) 100.0％
Consulting for implementation of Customer Information Management systems, sale of a business card management services and information security solutions
Canon Electronics Technology Inc.
2,400
(millions of yen) 100.0％
Design, development, operation, and maintenance of computer software and computer systems
Note: The Specified Wholly Owned Subsidiary is not existed at the end of this business term.
Consolidated Status
(5) Employees
Consolidated
Number of Employees
5,063 (Increase of 749 employees from the previous term)
Non-Consolidated
Number of Employees1,716 (Increase of 3 employees from the previous term)
(6) Canon Electronics Group Global Network
Name Location
Canon Electronics Inc.
Headquarters Chichibu-shi,Saitama Tokyo Head Office Minato-ku,Tokyo
Chichibu Plant Chichibu-shi,Saitama Misato Plant Misato-machi,Kodama-gun,Saitama
Akagi Plant Showamura,Tone-gun,Gunma
Canon Electronics Malaysia) Sdn. Bhd. Headquarters Malaysia
Canon Electronics Vietnam Co., Ltd. Headquarters Vietnam
Canon Electronics Business Systems Inc. Headquarters Chichibu-shi,Saitama
Canon Esquisse System Inc. Headquarters Minato-ku,Tokyo
Number of Shares Issuable
60,000,000 sharesIssued Shares, Capital Stock, Number of Shareholders
As of the beginning of This Term
Change during This Term
As of the end of This Term Issued Shares (share) 42,206,540 - 42,206,540 Capital Stock (yen) 4,969,150,000 - 4,969,150,000 Number of Shareholders (person) 16,428 － 1,791 14,637
Major Shareholders (Ten shareholders)
Name of Shareholders Number of Shares Held (thousands of shares) Shareholding Ratio (%)
Canon Inc. 22,500 55.1
BNP Paribas Sec Services Luxembourg/Jasdec/
Aberdeen Global Client Assets 944 2.3
The Master Trust Bank of Japan, Ltd.
(Trust Account) 801 1.9
Japan Trustee Services Bank, Ltd. (Trust Account) 595 1.4
Japan Trustee Services Bank, Ltd. (Trust Account9) 493 1.2
The Dai-ichi Life Insurance Company, Limited 414 1.0
State Street Bank and Trust Company 505223 370 0.9
Japan Trustee Services Bank, Ltd. (Trust Account5) 349 0.8
The Bank of New York Mellon 140042 295 0.7
The Bank of New York Mellon 140044 280 0.6
Note: Shareholding ratio is calculated by deducting the number of treasury shares (1,390,846 shares) from total shares issued.
Shareholding Ratio by Category
Financial Institusions 4,549,400 shares ( 10.8% ) Securities Companies 312,088 shares ( 0.7% ) Other Domestinc Companies 23,493,593 shares ( 55.7% ) Foreign Companies, etc. 5,789,708 sheres ( 13.7% ) Individuals and others 8,061,751 shares ( 19.1% )
42,206,540 shares
3
Directors and Audit & Supervisory Board Members
(1) Directors and Audit & Supervisory Board Members
Position Name Business in Charge or Important Concurrent Posts President & CEO Hisashi Sakamaki Outside Director of Fujitsu General Limited
Outside Director of YAOKO CO., LTD. Executive Vice
President Takeshi Hashimoto Group Executive of LBP Group and Business Machine Components Group Senior Managing
Director Takashi Ehara Group Executive of Magnetics & Components Group Senior Managing
Director Takumi Ishizuka
Group Executive of Corporate Administration Center and General Manager of Human Resources Management Div. Managing Director Tadashi Arai
Deputy Group Executive of Business Machine Components Group and Group Executive of Motor Group and Senior General Manager of Production Engineering Center
Managing Director Zhou Yaomin Group Executive of Materials Research Center Managing Director Akiyoshi Kimura Chairperson of Canon Space Solution Committee
Director Takeshi Uchiyama President & Representative Director of Canon Electronics Technology Inc. Director Junichi Takahashi Group Executive of Nickel Alloy Group
Director Toshio Uetake Senior General Manager of Procurement Center and Group Executive of EI Group
Director Masakazu Toyoda
Chairman & CEO of The Institute of Energy Economics, Japan Outside Director of Murata Manufacturing Co., Ltd.
Outside Corporate Auditor of Nitto Denko Corporation Director Katsuhiko Utsumi President and Representative Director of JATEC Co., Ltd.
Outside Director of Lilycolor Co., Ltd. Standing
Audit & Supervisory Board Member
Tatsuya Kawana Audit & Supervisory
Board Member Shunji Onda Audit & Supervisory
Board Member Shuji Iwamura
Attorney (Advisor of Nagashima Ohno & Tsunematsu)
Outside Corporate Auditor of FamilyMart UNY Holdings Co., Ltd. Outside Corporate Auditor of Riken Corporation
Outside Audit & Supervisory Board Member of The Hokkaido Bank, Ltd. Governor and Auditor of Government Pension Investment Fund, Japan Audit & Supervisory
Board Member Seiho Nakata
Certified Public Accountant
President & Representative Director of Knowledge Network Inc. Outside Audit & Supervisory Board Member of Advanex Inc. Part-time Auditor of Chuo Senden Kikaku Co., Ltd.
Notes: 1. A Director with asterisk were newly elected at the Ordinary General Meeting of Shareholders for the 78th Business Term held on March 29, 2017, and assumed their office.
2. Directors Mr. Masakazu Toyoda and Mr. Katsuhiko Utsumi are Outside Directors defined by Item 15, Article 2 of the Companies Act of Japan. Also, the Company has notified the above Outside Directors as independent directors to Tokyo Stock Exchange, Inc. on which the Company is listed as provided under the regulations of Tokyo Stock Exchange, Inc.
3. Audit & Supervisory Board Members Mr. Shuji Iwamura and Mr. Seiho Nakata are Outside Audit & Supervisory Board Members defined by Item 16, Article 2 of the Companies Act of Japan. Also, the Company has notified the above Outside Audit & Supervisory Board Members as independent auditors to Tokyo Stock Exchange, Inc. on which the Company is listed as provided under the regulations of Tokyo Stock Exchange, Inc.
4. Audit & Supervisory Board Member Mr. Seiho Nakata is qualified as a Certified Public Accountant and has a wealth of experience in finance and accounting.
Supervisory Board Members
Members
Directors
14
persons359
million yen(including 13 million yen for 2 Outside Directors)
Audit & Supervisory
Board Members
4
persons31
million yen(including 10 million yen for 2 Outside Audit & Supervisory Board Members)
Notes: 1. The above numbers of Directors respectively include two Director who have retired at the end of the Ordinary General Meeting of Shareholders for the 78th Business Term held on March 29, 2017.
2. Directors’ remuneration and other amounts do not include amount paid as salary for employees to those Directors who are also employees.
3. Remuneration and other amounts to Directors include accrued director’s bonuses for this term in the amount of 32 million yen.
(3) Outside Directors and Outside Audit & Supervisory Board
Members
Relation Between Important Organization of Concurrent Post and Canon Electronics Inc.
Name Concurrent Post Organization of Concurrent Post Relation with the Company Masakazu
Toyoda
Chairman & CEO The Institute of Energy Economics Japan No special relation Outside Director Murata Manufacturing Co., Ltd. No special relation Outside Corporate Auditor Nitto Denko Corporation No special relation Katsuhiko
Utsumi
President and Representative
Director JATEC Co., Ltd. No special relation Outside Director Lilycolor Co., Ltd. No special relation
Shuji Iwamura
Advisor Nagashima Ohno & Tsunematsu No special relation Outside Corporate Auditor FamilyMart UNY Holdings Co., Ltd. No special relation Outside Corporate Auditor Riken Corporation No special relation Outside Audit & Supervisory
Board Member The Hokkaido Bank, Ltd. No special relation Governor and Auditor Government Pension Investment Fund, Japan No special relation
Seiho Nakata
President & Representative
Director Knowledge Network Inc. No special relation Outside Audit & Supervisory
Principal Activities
Name Principal Activities Masakazu Toyoda
Outside Director
Attended 13 out of 16 Board of Directors meetings held during this term, and provided input based on his experience and insight in the field of economy and international trade when necessary.
Katsuhiko Utsumi Outside Director
Attended 15 out of 16 Board of Directors meetings held during this term, and provided input based on his experience and insight in business management over the years when necessary. Shuji Iwamura
Outside Audit & Supervisory Board Member
Attended all 16 of Board of Directors meetings and all 7 of Audit & Supervisory Board meetings held during this term, and provided input based on his experience and insight as a legal profession when necessary.
Seiho Nakata Outside Audit & Supervisory Board Member
Attended all 16 of Board of Directors meetings and all 7 of Audit & Supervisory Board meetings held during this term, and provided input based on his experience and insight as a Certified Public Accountant and in business management when necessary.
Outline of Contracts for Limitation of Liability
Pursuant to the provision of Paragraph 1, Article 427 of the Companies Act, the Company has entered into a contract with Outside Directors and Outside Audit & Supervisory Board Members which sets forth the limitation on their damage compensation liabilities resulting
from negligence of the Director’s or Audit & Supervisory Board Member’s duty. The amount of
(1) Name of Accounting Auditor
Ernst & Young ShinNihon LLC
(2) Remuneration and Other Amounts to Accounting Auditor for
This Term
Amount
(i)
Remuneration and other amounts payable by the Company for the services defined in Paragraph 1, Article 2 of the Certified Public Accountants Act
66 million yen
(ii) Total amount of cash and other financial benefits payable by the
Company and its subsidiaries to the Accounting Auditor 76 million yen
Notes: 1 In the audit agreement between the Company and the Accounting Auditor, remuneration amounts are determined on a lump-sum without breakdown into a separate remuneration amount for auditing in accordance with the Companies Act and in accordance with the Financial Instruments and Exchange Law. Accordingly, the amounts shown in (i) above represent total amounts of remuneration and other amounts for both of these auditing services.
2 The Audit & Supervisory Board has received necessary documents and reports from the Directors, related internal divisions, and the Accounting Auditor, as well as confirming the audit plan, status of the performed audit for the previous term, and that the estimated remuneration is appropriate for the relevant term, etc. As a result, the Audit & Supervisory Board reached an agreement regarding the remuneration to Accounting Auditor, upon judging it to be a rational standard for maintaining the improvement of audit quality.
(3) Policy Regarding Decision to Either Dismiss or Not Reappoint
Accounting Auditor
The Audit & Supervisory Board, by unanimous agreement, as needed, will dismiss the Accounting Auditor when confirmed that the Accounting Auditor falls under any Item of Paragraph 1, Article 340 of the Companies Act.
(4) Business Suspension Disposition to Which the Accounting
Auditor Was Subject during the Past Two years
(i) Subject of disposition
Ernst & Young ShinNihon LLC
(ii) Contents of disposition
・ Suspension of accepting new engagements : three months (From January 1, 2016 to March 31, 2016)
・ Business improvement order (improvement of the operation control structure)
(iii) Reason for disposition
・ In regard to the audit of financial statements for TOSHIBA CORPORATION in the fiscal year ended March 31, 2010, the fiscal year ended March 31, 2012, and the fiscal
year ended March 31, 2013, the above mentioned auditing firm’s certified public
accountants, in negligence of due care, attested financial statements containing material false matters as those containing no material false matters.
・ The above mentioned auditing firm’s operation of the services was found to be grossly
Properness of Operations
(the “Internal Control System”)
as well as the outline of activities for the aforementioned
systems
To ensure the properness of operations and to work for continuous improvement in corporate
value, Canon Electronics Inc. (the “Company”) and the enterprises consisting of the Company
and its subsidiaries (the “Canon Electronics Group”), shall foster a law-abiding awareness
based on the Spirit of “Three Selfs” (Self-motivation, Self-management, and Self-awareness) - a Canon universal principle - and “Canon Group Code of Conduct.” Furthermore, the Canon
Electronics Group shall firmly strive to ensure “management transparency” through clearly
defined approval processes and authorities of the President & CEO, group executives of the Company and the executive officers of each subsidiary of the Company.
