This is a translation of the original convocation in Japanese language for convenience
purposes only, and in the event of any discrepancy, the Japanese language shall prevail.

NOTICE OF CONVOCATION OF THE 52ND ORDINARY
GENERAL MEETING OF SHAREHOLDERSDATE AND TIME:

March 26 (Thursday), 2020 at 10:00 a.m. (Japan time)

PLACE:

Headquarters of Canon Marketing Japan Inc.
CANON HALL S, 3rd floor of CANON S TOWER
16-6, Konan 2-chome, Minato-ku, Tokyo

Index
NOTICE OF CONVOCATION ………………………………………………… 3
REFERENCE DOCUMENTS FOR GENERAL MEETING OF SHAREHOLDERS…… 7
BUSINESS REPORT………………………………………………………… 19
CONSOLIDATED FINANCIAL STATEMENTS………………………………… 34
NON-CONSOLIDATED FINANCIAL STATEMENTS…………………………… 36
AUDIT REPORTS…………………………………………………………… 38

Securities Code: 8060

To Our Shareholders
We would like to extend our sincerest gratitude to all of our shareholders for their continued support.
Canon Marketing Japan Inc. is pleased to present this notice to convene the 52nd Ordinary General Meeting of
Shareholders.
Looking back at our Group performance over the fiscal
year in review (from January 1, 2019 to December 31,2019), despite expansion in IT solutions, which is
positioned as a growth business, we recorded a slightdecline in sales, reflecting sluggish conditions on markets
for digital SLR cameras and home-use inkjet printers.
However, IT solutions generated higher gross profit on theback of increased sales, and operating income also rose,reflecting the continued reduction of SG&A expenses.
At the 52nd Ordinary General Meeting of Shareholders,we will be proposing a year-end dividends of 30 yen per
share. Together with the interim dividends (30 yen per
share), this will bring the full-year dividends to 60 yen per
share (unchanged from the previous fiscal year).
Under our Three-Year Management Plan 2020 to 2022, we
expect that market conditions for Canon main products
such as cameras and printers will remain challenging.
However, we will maintain profitability by increasing
productivity through efficient business operations. We will
also further strengthen IT solutions, which remains a pillarof growth, and improve their profitability. Through this, we
aim to achieve growth in both sales and profits.
We sincerely appreciate the continued support of ourvalued shareholders.

Masahiro Sakata
March 2020

President & Representative Director

Cover Photo: The Val d'Orcia in Italy from the 2020 Canon Marketing Japan Calendar “World Heritage Journey Sekaiisan wo Tazunete” by Kazuyoshi Nomachi

1

Canon Marketing Japan Inc.

Results Highlights(Figures are rounded to the nearest unit) Fiscal year

Net sales(Billions of yen)Comparison withprevious period

Operating income(Billions of yen)Comparison withprevious period

12.1%

0.1%

646.0

629.3

2015

2016

632.2

2017

621.6

2018

Ordinary income

621.1

2019

(Billions of yen)Comparison withprevious period

26.6

27.7

2015

2016

30.4

28.9

2017

2018

Profit attributable to owners of parent

28.7

31.5

30.5

Comparison withprevious period

6.8%

33.9
15.7

2015

2016

2017

2018

2019

2019

(Billions of yen)

11.2%
28.0

32.4

2015

18.2

2016

20.7

20.8

2017

2018

22.3

2019

Profit attributable to owners of parent per share
(Yen)

121

140

159

161

172
Please see our website for more detailed businessresults.
canon.jp/8060e-ir

2015

2016

2017

2018

2019

Canon Marketing Japan Inc.

2

NOTICE OF CONVOCATIONTO OUR SHAREHOLDER

Securities Code: 8060
March 3, 2020

Canon Marketing Japan Inc.
16-6, Konan 2-chome, Minato-ku, Tokyo

Masahiro Sakata

President & Representative Director

NOTICE OF CONVOCATION OF THE 52ND ORDINARY
GENERAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 52nd Ordinary General Meeting of Shareholders of Canon Marketing Japan 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 or by the Internet, etc. After
reviewing the following Reference Documents for General Meeting of Shareholders, please exercise your voting rights
by no later than 5:30 p.m. on March 25 (Wednesday), 2020 (Japan time).

1. DATE AND TIME:		

March 26 (Thursday), 2020 at 10:00 a.m. (Japan time)

2. PLACE:						

Headquarters of the Company
CANON HALL S, 3rd floor of CANON S TOWER
16-6, Konan 2-chome, Minato-ku, Tokyo

3. MATTERS CONSTITUTING THE PURPOSE OF THE MEETING
Matters to be Reported:	1. Reports on the contents of the Business Report and Consolidated Financial
Statements for the 52nd Fiscal Year (from January 1, 2019 to December 31,2019), 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 Non-Consolidated Financial Statements for the
52nd Fiscal Year (from January 1, 2019 to December 31, 2019).
Matters to be Resolved upon: Item No. 1 Dividends from Surplus
		
Item No. 2 Election of Six Directors
		
Item No. 3 Election of Three Audit & Supervisory Board Members
		
Item No. 4 Election of Accounting Auditor		
Item No. 5 Payment of Bonuses to Directors

3

Canon Marketing Japan Inc.

Notice of Convocation
Reference Documents For General
Meeting of Shareholders Upon attending the Meeting, please present the enclosed Voting Form to the receptionist at the place of the
Meeting.

 About the procedures for the exercise of voting rights in writing or by the Internet, etc, please see the following
pages.

Consolidated Financial
Statements

Business Report The following items are posted on the Company’s website (canon.jp/8060-ir) in accordance with the related laws andregulations and Article 1 4 of the Company’s Articles of Incorporation and are therefore not included in the
documents attached to this Notice:(1) Systems for Ensuring Appropriateness of Business Operations and Outline of Implementation Activities
to be described in the Business Report(2) Consolidated Statement of Changes in Net Assets and Notes to Consolidated Financial Statements(3) N on-Consolidated Statement of Changes in Net Assets and Notes to Non-Consolidated Financial
Statements
Items (1) through (3) above are part of the Business Report, Consolidated Financial Statements and Non-Consolidated
Financial Statements, which Audit & Supervisory Board Members audited to prepare their audit reports, and item (2)above are part of Consolidated Financial Statements and item (3) above are part of Non-Consolidated Financial
Statements, which Accounting Auditor audited to prepare its audit reports.

Audit Reports

Financial Statements Any revisions to the Reference Documents for General Meeting of Shareholders, Business Report, Consolidated
Financial Statements and Non-Consolidated Financial Statements will be posted on the company’s website on theInternet (canon.jp/8060-ir).

Canon Marketing Japan Inc.

4

NOTICE OF CONVOCATION

Guidance Notes on the Exercise of Voting Rights
Your voting rights to be exercised at the General Meetings of Shareholders are important rights. After reviewing thefollowing Reference Documents for the General Meeting of Shareholders (pages 7-18), please exercise your voting rights.

The Voting rights can be exercised in one of the following three ways.
Exercise of Voting Rights by Attending the Meeting
DATE AND TIME:
PLACE:March 26 (Thursday), 2020 at 10:00 a.m. (Japan time)
Headquarters of the Company

CANON HALL S, 3rd floor of CANON S TOWER
16-6, Konan 2-chome, Minato-ku, Tokyo

Please bring and present the enclosed Voting Form to the receptionist at the placeof the Meeting.

Exercise of Voting Rights in Writing (Via Postal Mail)
Deadline for exercising
voting rights:

The Voting Form must reach us no later than
5:30 p.m. on March 25 (Wednesday), 2020 (Japan time)

Please indicate your for/against for each of the propositions on the enclosed
Voting Form and return it by postal mail.

Exercise of Voting Rights by Electromagnetic Means (Via the Internet)
Deadline for exercising
voting rights:

The exercise of voting rights must be made no later than
5:30 p.m. on March 25 (Wednesday), 2020 (Japan time)

Please enter your for/against for each of the propositions on the website for the
exercise of voting rights (https://soukai.mizuho-tb.co.jp/) and send it.
* If voting rights are exercised in duplicate via the Internet and via postal mail, votes made via the Internet will be deemed to be valid.
* If you exercise your voting rights more than once via the Internet, we will treat the last exercise of your voting rights as effective.
* Please note that you may not be able to access the website for the exercise of voting rights depending on your Internet operating environment, your Internet service or themodel of the device you use.

* Any internet connection charges, communication charges or other fees incurred when you access the website for the exercise of voting rights shall be borne by you.

5

Canon Marketing Japan Inc.

Notice of Convocation

Guidance Notes on the Exercise of Voting Rights via the Internet, etc.
How to the enter the voting
code and password

Scan the QR code printed on the bottom-right of thevoting form.

Access the website for the exercise of voting rights.

Click on the“Next” button.

1

Enter your voting code shown on your voting form.

2

Business Report1

Reference Documents For General
Meeting of Shareholders

You can log-in to the voting website without having
to enter your voting code or password.

https://soukai.mizuho-tb.co.jp/* “QR code” is a registered trademark of DENSO WAVE INCORPORATED.

Indicate your approval or disapproval of theresolutions by following the directions on the screen.

Enter voting
code.
Click on the“Next” button.

Consolidated Financial
Statements

Website for the
exercise of
voting rights

How to scan the QR code using your smartphone“Smart voting”

2

Enter your password shown on your voting form.

Enter
password.
Click on the“Log-in” button.

4 Indicate your approval or disapproval of theresolutions by following the directions on the screen.

If you have any questions about use of the voting
website or “smart voting,” please contact:

Financial Statements

You can exercise your voting rights ONLY ONCE by “smart voting.”
If you wish to change your vote after exercising your voting rights
by “smart voting,” please access the PC version of website for the
exercise of voting rights, login by entering your voting code andpassword shown on the voting form and vote again.
* S canning the QR code again can take you to the PC version website for the
exercise of voting rights.

Internet Help Dial: Stock Transfer Agency Department Mizuho Trust & Banking Co., Ltd.

Telephone: 0120-768-524 (toll-free)

Audit Reports

3

Operating Hours: 9:00 a.m. to 9:00 p.m. (excluding Saturdays, Sundays and national holidays)

Platform for Electronic Exercise of Voting Rights
The electronic voting platform for institutional investors operated by Investor Communications Japan Inc. is available for nominee
shareholders such as trust & custody services banks, etc. (including standing proxies) that have applied to use such platform in advance.
Canon Marketing Japan Inc.

6

REFERENCE DOCUMENTS FOR GENERAL MEETING OF SHAREHOLDERS
Item No. 1: Dividends from Surplus
We have comprehensively considered the business results, etc. for this Fiscal Year, and propose a year-end dividends as
described below.
Thus, the full-year dividends will be 60.00 yen per share, which includes interim dividends of 30.00 yen per share.
Although it is provided in the Articles of Incorporation that the dividends from surplus, etc. may be decided by aresolution of the board of directors, we have made it a matter to be resolved at this Meeting to have an opportunity tohear the shareholders’ views directly.

1

Type of dividend:2Matters concerning distribution ofdividend and its total amount:3

Effective date of the dividend from surplus:

Cash30.00 yen per common share of the Company
Total amount of dividend 3,889,986,870 yen

March 27, 2020

<REFERENCE> Changes in dividends (yen)
70
60
50
40
30

25

20
10

10

10

10

10

14
10

25

35

35

25

25

30

12
12

15

20

30

20

30

0
43rd
44rd
45rd
46rd
47rd
48rd
49rd
50rd
51rd
52nd
Business term Business term Business term Business term Business term Business term Business term Business term Business term Business Term
(Plan)
Full-year dividends
Year-end dividends

7

Canon Marketing Japan Inc.

Notice of Convocation

Item No. 2: Election of Six Directors

1

Reappointment

Masahiro
SakataPresident & Representative Director andExecutive President

94%(15/16)

2

Reappointment

Masachika
Adachi

Director & Senior Vice President
Director of Enterprise Business Unit

94%
(15/16)

3

Reappointment

Shiro
HamadaDirector & Vice President
Director in charge of Group Accounting andGroup Auditing100%(16/16)

4

New
Appointment

HatsumiHirukawa

Director & Vice President
Director in charge of Group Planning and Group
Service & Support

5

Reappointment

Akio
Dobashi

Outside Director

88%(14/16)

6

Reappointment

YoshioOsawa

Outside Director

100%(16/16)

OutsideIndependent

OutsideIndependent

Business Report

Attendance at Member of Nomination
Board of Directors’ and Remuneration
Meetings
Advisory Committee

Consolidated Financial
Statements

Present Position and Areas of Responsibility
at the Company

NameFinancial Statements

Candidate
No.

Reference Documents For General
Meeting of Shareholders

The term of offices of all of the six Directors will expire at the end of this Meeting. Accordingly, we would like to elect six
Directors.
The candidates for the position of the Directors are as follows:*In the above list for the candidates for Directors who currently serve as members of the Nomination and Remuneration Committee, the “ ” symbol denotes the chairperson and the “ ”
symbol indicates a member. The organization of the Nomination and Remuneration Committee is presented on page 15.

<REFERENCE>
Changes in the number of members of the Board of Directors
Directors

1
2015

10

Independence of the Board of
Directors after the election

10
7

6

6
2

2

2

2

2

2016

2017

2018

2019

Audit Reports

9

Independent Outside Directors included

Two Independent
Outside Directors
out of six Directors

2020(Candidates)

Canon Marketing Japan Inc.

8

BUSINESS REPORT
Brief personal record, position, business in charge and important concurrent posts

Candidate
No.

As of
Apr. 1977: Entered the Company
Mar. 2006: Director
Mar. 2009: Managing Director
Mar. 2011: Director & Senior Vice President
Mar. 2013: Director & Senior Vice President
Apr. 2013: Company President of Business Solution Company
Mar. 2015: President & Representative Director and Executive President (present)

1
Masahiro Sakata(April 11, 1953)
33,403 shares

Mr. Sakata led various business fields for many years. He has managed the Company as
the President & Representative Director, and has considerable experience, knowledge ofmanagement for the Company and excellent expertise. Thus, he has again been selected
as a candidate for a Director.
Brief personal record, position, business in charge and important concurrent posts

Candidate
No.

As of
Apr. 1982: Entered the Company
Jul. 2009:	Group Executive of MA Business Sales Headquarters, Business Solutions Company
Mar. 2013: Vice President
Mar. 2015: Director & Senior Vice President
Apr. 2015: Company President of Business Solutions Company
Jan. 2018: Director of Enterprise Business Unit (present)
Apr. 2019: Director & Senior Vice President (present)

2
Masachika Adachi(March 30, 1960)
13,012 shares

9

Reason for Nomination as Director

Canon Marketing Japan Inc.

Reason for Nomination as Director
Mr. Adachi led various business fields for many years. He has held the posts of Directorand Executive Officer, and has considerable experience and knowledge of management
for the Company. Thus, he has again been selected as a candidate for a Director.

(August 31, 1961)
11,634 shares

Reason for Nomination as Director
Mr. Hamada led the Finance and Accounting field for many years. He has held the postsof Director and Executive Officer, and has considerable experience and knowledge ofmanagement for the Company. Thus, he has again been selected as a candidate for a
Director.

Business Report

Shiro Hamada

Reference Documents For General
Meeting of Shareholders

As ofApr. 1984: Entered the Company
Apr. 2011: 	Deputy Chief Executive of Administrative Headquarters of Canon IT Solutions Inc.
Jul. 2013: Group Executive of Accounting Headquarters (present)
Apr. 2015: Executive Officer
Mar. 2016: Director & Vice President (present)
Jan. 2018: Director in charge of Group Accounting and Group Auditing (present)

3

Brief personal record, position, business in charge and important concurrent posts(January 8, 1965)
3,851 shares

Consolidated Financial
Statements

Hatsumi Hirukawa

Reason for Nomination as Director
Financial Statements

4

As of
Apr. 1987: Entered the Company
Jan. 2015: 	Business Solution Company Area Sales Headquarters Area Business Promotion
Group Senior General Manager
Jul. 2016: Planning Headquarters Group Executive
Apr. 2017: Executive Officer
Apr. 2019: Vice President (present)
Jan. 2020: 	Director in charge of Group Planning and Group Service & Support (present)		 Director of Service & Support Headquarters (present)

Mr. Hatsumi Hirukawa has led Business and Planning fields for many years. He has held
the post of Executive Of ficer, has considerable experience and knowledge ofmanagement for the Company and deserves to be involved in the Company’s
management. Thus, he has been newly selected as a candidate for Director.

Audit Reports

CandidateNo.

New
Appointment

Notice of Convocation

Brief personal record, position, business in charge and important concurrent posts

Candidate
No.

Canon Marketing Japan Inc.

10

BUSINESS REPORT
Brief personal record, position, business in charge and important concurrent posts

CandidateNo.

5
Akio Dobashi(January 2, 1949)

As ofApr. 1972: Entered Nichimen Company, Limited (presently Sojitz Corporation)
Apr. 2004: Representative Director, President & CEO of Sojitz Corporation
Jun. 2005: Representative Director, President & CEO of Sojitz Holdings Corporation
Oct. 2005:	The corporate name was changed to Sojitz Corporation due to the merger ofSojitz Holdings Corporation and Sojitz Corporation
		 Representative Director, President & CEO of Sojitz Corporation
Apr. 2007: Representative Director and Chairman of Sojitz Corporation
Jun. 2015: Outside Director of OSJB Holdings Corporation
Mar. 2016: Outside Director of the Company (present)
Jun. 2017: Outside Director of Maeda Corporation (present)
Important concurrent post

0 shares

Outside Director of Maeda Corporation
OutsideIndependent

Reason for Nomination as Outside Director
Mr. Dobashi has actively performed as a top executive at a general trading company formany years. He has considerable experience and excellent expertise in company
management. We assessed that he could accomplish the duties as the Outside Director
appropriately from such experience and excellent expertise. Thus, he has again been
selected as a candidate for an Outside Director.
His term as an Outside Director will be four years as of the close of this Meeting.

11

Canon Marketing Japan Inc.

(January 22, 1952)
0 shares
Independent

Reference Documents For General
Meeting of Shareholders

Yoshio Osawa

As ofApr. 1975: Entered Sumitomo Corporation
Jun. 2003:	Concurrent post as director of Sumitomo Computer Service Corporation(presently SCSK Corporation)
Apr. 2005: Executive Officer of Sumitomo Corporation
Apr. 2008: Managing Executive Officer of Sumitomo Corporation
Jun. 2008:	Representative Director and Managing Executive Officer of Sumitomo
Corporation
Apr. 2011:	Representative Director and Senior Managing Executive Officer of Sumitomo
Corporation
Apr. 2013:	Representative Director, Assistant to President and CEO of Sumitomo Corporation
		 Adviser of SCSK Corporation
Jun. 2013: Representative Director, President & COO of SCSK Corporation
Apr. 2016: Chairman of the Board of the Directors, SCSK Corporation
Mar. 2018: Outside Director of the Company (present)
Jun. 2019: Outside Director of Citizen Watch Co., Ltd. (present))

Business Report

6

OutsideNotice of Convocation

Brief personal record, position, business in charge and important concurrent posts

Candidate
No.

Important concurrent post
Outside Director of Citizen Watch Co., Ltd.

Consolidated Financial
Statements

Reason for Nomination as Outside Director

Financial Statements

Mr. Yoshi Osawa has actively performed as a top executive at a general trading company
and IT services company for many years. He has considerable experience and excellent
expertise in company management. On this basis, we assessed that he could accomplish
the duties of outside director appropriately. Thus, he has been newly selected as a
candidate for an Outside Director. His term as an Outside Director will be two years as of
the close of this Meeting.

Canon Marketing Japan Inc.

Audit Reports

Notes: 1. None of the candidates for the Directors have any special interest in the Company.
2. Should Mr. Akio Dobashi and Mr. Yoshio Osawa be elected, the Company will make both of them independent directors under the regulation of the Tokyo Stock Exchange, Inc.
3.	Mr. Akio Dobashi has worked for Sojitz Corporation, which does business with the Company. Although there are transactions in areas such has business equipment maintenancebetween Sojitz Corporation and the Company, the annual amount of the transactions is less than 1% of the consolidated revenue of Sojitz Corporation and the Company
respectively. Mr. Akio Dobashi, therefore, meets the Company’s Independence Standards for Independent Directors/Audit & Supervisory Board Members (please see page 16).
4.	Mr. Yoshio Osawa has worked for Sumitomo Corporation and SCSK Corporation, both of which do business with the Company. Although there are transactions in areas such has
business equipment sales between Sumitomo Corporation and the Company, the annual amount of the transactions is less than 1% of the consolidated revenue of Sumitomo
Corporation and the Company respectively. Similarly, although there are transactions in areas such has IT equipment and business equipment sales between SCSK Corporationand the Company, the annual amount of the transactions is less than 1% of the consolidated revenue of SCSK Corporation and the Company respectively. Mr. Yoshio Osawa,
therefore, meets the standards for Independence Standards for Independent Directors determined by the Company (please see page 16).
5.	The Company has entered into a contract with Mr. Akio Dobashi and Mr. Yoshio Osawa limiting the amount of their damages compensation liability defined in Paragraph1,
Article 423 of the Companies Act of Japan to the limit prescribed by laws and regulations. Should they be reelected, the Company will continue the aforementioned contract
with them.

12

BUSINESS REPORT

Item No. 3: Election of Three Audit & Supervisory Board Members
The term of offices of Audit & Supervisory Board Members Mr. Masahiro Shimizu, Mr. Kunihiko Tedo and Mr. Nobuyasu
Kusumi will expire at the end of this Meeting.
We would like you to elect three Audit & Supervisory Board Members. Further note that prior consent has beenobtained from the Audit & Supervisory Board concerning the submission of this item.
The candidates for the Audit & Supervisory Board Members are as follows:
Brief personal record and position

Candidate
No.

As of
Apr. 1984: Entered the Company
Jul. 2012:	Senior General Manager of Consumer Business Promotion Group, Consumer
Sales Headquarters, Imaging System Company
Jul. 2020:	Principal Staff Manager of Consumer East Japan Sales Group, Consumer
Business Unit (present)

1

Reason for Nomination as Audit & Supervisory Board Members

Masatoshi Tanise(March 1, 1962)
1,625 shares

Mr. Masatoshi Tanise led various business fields for many years. He has extensive
operational experience and expertise in a wide range of fields and, on this basis, we
assessed that he could accomplish the duties as an Audit & Supervisory Board Member
appropriately. Thus, he has been newly selected as a candidate for Audit & Supervisory
Board Member.

New
Appointment

Brief personal record and position

CandidateNo.

2
Iwao Hashimoto(June 12, 1961)
500 shares
New
Appointment

13

OutsideCanon Marketing Japan Inc.

Independent

As ofApr. 1984: Entered The Yasuda Fire & Marine Insurance Co., Ltd
Apr. 2010: General Manager, Eastern Hokkaido Branch, Sompo Japan Insurance Inc.
Jun. 2012:	General Manager, Osaka Corporate Sales Dept. 2 and General Manager incharge of Sales Promotion Office
Apr. 2016:	Executive Officer and Director, Hokkaido Headquarters, Sompo Japan
Nipponkoa Insurance Inc.
Apr. 2019: 	Managing Executive Officer and Director, Kanto Headquarters (present) 		
Business Unit (present)
Reason for Nomination as Outside Audit & Supervisory Board Members
Mr. Iwao Hashimoto was involved in insurance company management for many years. He
has extensive experience and expertise in a wide range of fields and, on this basis, we
assessed that he could accomplish the duties as an Outside Audit & Supervisory Board
Member appropriately. Thus, he has been newly selected as a candidate for Outside
Audit & Supervisory Board Member.

Notice of Convocation

Brief personal record and position

CandidateNo.

3

Reference Documents For General
Meeting of Shareholders

As ofApr. 1985: Entered Canon Inc.
Aug.2013:	General Manager of Finance Div. of Finance Div., Finance Accounting Center,
Finance & Accounting Headquarters
Apr. 2014:	General Manager of Finance Div., Finance Accounting Center, Finance &Accounting Headquarters (present)
Reason for Nomination as Outside Audit & Supervisory Board Members(Match 22, 1962)
0 shares
New
Appointment

Mr. Nobutoshi Matsumoto has been in charge of accounting operations at Canon Inc. formany years. He has extensive experience and outstanding expertise in this field, and, on
this basis, we assessed that he could accomplish the duties as an Outside Audit &Supervisory Board Member appropriately. Thus, he has been newly selected as a
candidate for Outside Audit & Supervisory Board Member.

Business Report

Nobutoshi Matsumoto

OutsideAudit Reports

Financial Statements

Consolidated Financial
Statements

Notes: 1. None of the candidates for the Audit & Supervisory Board Members have any special interest in the Company.
2.	Should Mr. Iwao Hashimoto be elected, the Company will make him independent director under the regulation of the Tokyo Stock Exchange, Inc. He meets the Company’s
Independence Standards for Independent Directors/Audit & Supervisory Board Members (please see page 16).
3.	Mr. Iwao Hashimoto has worked for Sompo Japan Nipponkoa Insurance Inc., which does business with the Company. Although there are transactions in areas such has businessequipment sales between Sompo Japan Nipponkoa Insurance Inc. and the Company, the annual amount of the transactions is less than 1% of the consolidated revenueof Sompo Japan Nipponkoa Insurance Inc. and the Company respectively. Mr. Iwao Hashimoto, therefore, meets the Company’s Independence Standards for Independent
Directors/Audit & Supervisory Board Members.
4.	For the past five years (to the present), Mr. Nobutoshi Matsumoto has served as an executive at Canon Inc., which is a specified related party (parent company) of the Company.
His position at Canon Inc. is as shown in in his brief personal record. Mr. Nobutoshi Matsumoto plans to resign from Canon Inc. before the Ordinary General Meeting of
Shareholders of the Company.
5.	For the past five years (to the present), Mr. Nobutoshi Matsumoto has served as an Audit & Supervisory Board Member at Canon Precision Inc. and Canon Components, Inc.,
which are specified related parties (subsidiaries of the parent company) of the Company. He plans to resign as Audit & Supervisory Board Member of both companies before theOrdinary General Meeting of Shareholders of the Company.
6. For the past two years, Mr. Nobutoshi Matsumoto has received compensation from Canon Inc. as one of its Executives.
7.	Should Mr. Masatoshi Tanise, Mr. Iwao Hashimoto, and Mr. Nobutoshi Matsumoto be elected, the Company will enter into a contract with them limiting the amount of their
damages compensation liability defined in Paragraph1, Article 423 of the Companies Act of Japan to the limit prescribed by laws and regulations.

Canon Marketing Japan Inc.

14

BUSINESS REPORT(Reference) Structure and Other Details of the Board of Directors and the Audit & Supervisory Board
Structure of Board of Directors
We have established a structure that mainly consists of Representative Directors who oversee company-wide business strategies and their
execution, and Executive Directors who oversee each business domain or each headquarters function. In addition, two or more Independent
Outside Directors are included as members of the Board of Directors to ensure the soundness of management. The Board of Directors handles
important decision-making and oversees the performance status of business operations in accordance with laws and regulations.

Structure of Audit & Supervisory Board
As an auditing organization independent from the Board of Directors, the Audit & Supervisory Board consists of persons who haveconsiderable knowledge of the Company’s business and corporate management, and persons who are well-versed in accounting and otherprofessional fields. At least one of the Outside Audit & Supervisory Board Members is a person who satisfies the independence standards
and qualifications separately prescribed by the Board of Directors. The Audit & Supervisory Board made up of these Members works
together with the accounting auditors and the internal audit division of the Company to audit the execution of duties by Directors and thestatus of assets of the Company to ensure the soundness of management.

Policies and procedures in the Nomination of Director and Audit & Supervisory Board Member Candidates
1. Policies
In principle, we select candidates for Directors and Audit & Supervisory Board Members appointed as higher positions from among the persons
who are recognized as being able to perform the corresponding duties fairly and accurately, who have deep insight, and who satisfy thefollowing requirements, regardless of their gender, nationality, age, or other personal attributes.
<Directors>
The candidates must have a true understanding of the Company’s corporate philosophy and Code of Conduct, a broad and deep understandingof the Company’s business and operations through experience gained as Executive Officers, etc., and must be able to make effective judgmentfrom a comprehensive perspective of multiple businesses and headquarters functions.
<Independent Outside Directors>
The candidates must satisfy the independence standards and qualifications separately prescribed by the Board of Directors and must have a highdegree of professionalism and abundant experience in corporate management, risk management, law, economics, and other fields.
<Audit & Supervisory Board Members>
The candidates must have a high degree of professionalism and a wealth of experience in corporate management, financial and accounting
matters, internal controls, and other fields. One or more candidates for Outside Audit & Supervisory Board Members of the Audit & Supervisory
Board must satisfy the independence standards and qualifications separately prescribed by the Board of Directors.
2. Procudures
The Company established the voluntary “Nomination and Remuneration Advisory Committee” consisting of the President & Representative
Director, one Director and two Independent Outside Directors.
In nomination of candidates for Directors/Audit & Supervisory Board Members (including successor to President and candidates therefor),President recommend candidates from among persons who are recognized to satisfy the prescribed requirements and the fairness/
appropriateness of recommendation is checked by the nomination committee. Then the proposal therefor is submitted to and deliberated by
the Board of Directors.
In addition, in regards to candidates for Audit & Supervisory Board Members, deliberation at the Audit & Supervisory Board meeting is conducted
and the consent of the board is obtained prior to deliberation at the Board of Directors meeting.

15

Canon Marketing Japan Inc.

Notice of Convocation“ Independence Standards for Independent Directors/Audit & Supervisory Board Members” of Canon Marketing
Japan Inc.

Reference Documents For General
Meeting of Shareholders

Canon Marketing Japan Inc. hereby establishes the “Independence Standards for Independent Directors/Audit & Supervisory Board
Members” resolved by the board of directors with the consent of all Audit & Supervisory Board Members, in order to clarify the standards for
ensuring independence of Independent Directors/Audit & Supervisory Board Members of Canon Marketing Japan Inc., taking into
consideration Japan’s Corporate Governance Code (Principle 4.9) and the independence criteria set by securities exchanges in Japan.

Independence Standards for
Independent Directors/Audit & Supervisory Board Members

Business Report

Canon Marketing Japan Inc. deems that a person who satisfies the requirements for Outside Directors/Audit & 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 Director/Audit & Supervisory Board Member” (a person who is
independent from the management of Canon Marketing Japan Inc. and unlikely to have conflicts of interest with generalshareholders).

Financial Statements

Consolidated Financial
Statements

1. A person/organization for which Canon Marketing Japan Group (Canon Marketing Japan Inc. and its subsidiaries; hereinafter
the same) is a major client, or a major client of Canon Marketing Japan Group, or an executing person of such organization orclient
2. A large shareholder of Canon Marketing Japan Inc., or an executing person of such shareholder
3. A person/organization receiving large amounts of contributions from Canon Marketing Japan Group, or an executing personof such organization
4. A consultant, accounting professional or legal professional who has received a large amount of money or other properties
from Canon Marketing Japan Group, other than as compensation for being a Director/Audit & Supervisory Board Member (ifthe recipient is a corporation, partnership or any other organization, this item applies to any person belonging to saidorganization.)
5. A certified public accountant belonging to the audit firm engaged to conduct the statutory audit of Canon Marketing Japan
Group (including any such accountant to whom this item has applied in the last 3 fiscal years)
6. An executing person of another company in cases where an executing person of Canon Marketing Japan Inc. is an outside
director/Audit and Supervisory Board Member of such other company
7. An immediate family member (spouse and a relative within the second degree of kinship) of any of the persons listed in eachof items 1 to 6; provided, however that the persons to whom this is applicable shall be limited to key executing persons suchas directors, executive officers of companies and partners of advisory firms

Canon Marketing Japan Inc.

Audit Reports(Notes)*In item 1, “major” means in cases where the total amount (for any fiscal year during the last 3 fiscal years) of transactions between Canon Marketing Japan Group and suchclient exceeds 1% of the consolidated sales of Canon Marketing Japan Group or such client.
*In item 2, “a large shareholder” means a shareholder who directly or indirectly holds 5% or more of the total voting rights of Canon Marketing Japan Inc.
*In item 3, “a large amount” means in cases where the total amount of contributions exceeds ¥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 fiscal year during the last 3 fiscal years of Canon Marketing Japan Inc.
*In item 1 to 3, and 6, an “executing person” means an executive director, executive officer and employee including manager (in items 1 to 3, including a person to whom
this item has applied in any fiscal year during the last 3 fiscal years).
*In item 4, “a large amount” means in cases where the total amount of money or other properties received by said consultant, etc., exceeds ¥12 million (in cases where therecipient is a person) or 1% of the annual gross sales of such consultant, etc. (in cases where the recipient is an organization).

16

BUSINESS REPORT

Item No. 4: Election of Accounting Auditor
Ernst & Young ShinNihon LLC will retire as the Company’s Accounting Auditor due to expiry of its term of office at theconclusion of the Ordinary General Meeting of Shareholders.
Based on the decision of the Audit & Supervisory Board, we would like you to elect Deloitte Touche Tohmatsu LLC for
the position of Accounting Auditor.
Although Ernst & Young ShinNihon LLC has good systems for ensuring that accounting audits are conducted properly
and appropriately, given that it has been auditing the Company’s accounts for a long period of time and also promptedby consideration of a change of accounting auditor by Canon Inc., the parent company, the Audit & Supervisory Board
judged that it is time for a change of accounting auditor.
Accordingly, the Audit & Supervisory Board concluded that Deloitte Touche Tohmatsu LLC is an appropriate candidate
for the new accounting auditor given that, in light of its independence, expertise, quality control system and otherfactors, Deloitte Touche Tohmatsu LLC will conduct audits properly and that a change in accounting auditor can be
expected to result in audits from a fresh perspective.
Details of the candidate for accounting auditor including its name, main place of business and history, are as follows.
(As of December 31, 2019)

17

Name

Deloitte Touche Tohmatsu LLC

Main placeof business

Marunouchi Nijubashi Building, 3-2-3
Marunouchi, Chiyoda-ku, Tokyo

HistoryMay
1968: Tohmatsu Awoki & Co. establishedMay
1975:	Joined Touche Ross International (“TRI”) allianceFebruary 1990: Change the company name to Tohmatsu & Co.
July
2009:	Converted to a limited liability company and changed company nameto Deloitte Touche Tohmatsu LLC

Overview

Contributed capitalPartners (Certified Public Accountants)
Specified Partners
Professional staff (Certified Public Accountants)
Successful applicants of the CPA examination,
including junior Certified Public Accountants(includes part-qualified accountants)
Other professional staff
Administrative staff
Total
Number of audit engagements

Canon Marketing Japan Inc.

1,041 million yen
528
52
2,759
1,078
2,188
175
6,780
3,306 (as of the end of May 2019)Notice of Convocation

Item No. 5: Payment of Bonuses to Directors

Audit Reports

Financial Statements

Consolidated Financial
Statements

Business Report

Reference Documents For General
Meeting of Shareholders

It is proposed that bonuses will be paid to the four Directors excluding the Outside Director as of the end of this fiscal
year, in appreciation of their services during this fiscal year, which totals ¥35,750,000 considering the results for this fiscal
year, etc.

Canon Marketing Japan Inc.

18

BUSINESS REPORT (January 1, 2019 to December 31, 2019)
1. Current Conditions of Canon Marketing Japan and its consolidated subsidiaries (the “Group”)(1) Business Progress and Achievement
General Business Conditions
Looking back at the Japanese economy over this year, business confidence continued to deteriorate, especially in the
manufacturing industry, amid rising trade tensions. However, businesses tended to increase their IT investment andother capital investment. Meanwhile, the outlook for consumer spending remains unclear, despite measures such as
the introduction of reduced tax rates for everyday essentials to limit the impact of the consumption tax hike, andconsumer sentiment continued to appear weak.
Against this economic backdrop, although sales of IT solutions to large enterprises and SMEs grew, sales of digital SLR
cameras, industrial equipment and other products fell, and we recorded net sales of ¥621,134 million (down 0.1% fromthe previous year).
In terms of income, mainly due to higher gross profit on the back of increased sales of IT solutions and lower expenses,
we achieved operating income of ¥32,439 million (up 12.1%) and ordinary income of ¥33,937 million (up 11.2%). Profit
attributable to owners of parent came to ¥22,250 million (up 6.8%).
Starting with this Year, the segment classification has been changed. In the year-on-year comparisons contained in thisreport, the prior-year figures have been adjusted to reflect the new classification.
Constitution of Net Sales by Segment

Professional
Net sales ¥43,675 million

Area
Net sales ¥268,309 million

7%

21%

42%
30%

Other *Net sales ¥(19,470) million
19

Canon Marketing Japan Inc.

Consumers
Net sales ¥132,790 million

Enterprise
Net sales ¥195,828 million

The constitution is calculated based on the simple total of
the net sales of each segment.
* “Other” includes call centers, BPO service business andelimination of inter-segment transactions.

Notice of Convocation

Consumers

Net sales¥132,790 million

Operating income¥6,865 million

Reference Documents For General
Meeting of Shareholders

Business Conditions by Segment

Consolidated Financial
Statements

Business Report

Sales of mirrorless cameras decreased in the absence of the sharp growth in the sales volume of models such as EOS
KissM seen the previous fiscal year, despite efforts to expand sales of products such as EOS RP, a full-frame mirrorlesscamera. Sales of digital SLR cameras declined as a result of market contraction, and overall sales of digitalinterchangeable lens cameras also fell. Meanwhile, sales of compact digital cameras also decreased due to the shrinking
market. We continued to maintain top shares in the markets for digital SLR cameras, mirrorless cameras and compact
digital cameras respectively.
Sales of inkjet printers grew mainly due to strong sales of printers with the extra-large capacity tank GIGA TANK, which
offset decline in home-use inkjet printers amid sluggish market conditions. Sales of ink cartridges decreased owing
primarily to a reduction in printing volume. We maintained the largest share of the inkjet printer market for the sixthyear running.
Sales of IT products declined, reflecting decreased sales of consumables such as SD cards and peripherals despite asteady performance in products such as gaming PCs.

Audit Reports

Financial Statements

As a result, net sales in this segment totaled ¥132,790 million (down 11.6% from the previous year). Operating income
came to ¥6,865 (down 6.5% from the previous year).

EOS RP

Printers with the extra-large capacity tank GIGA TANK
Canon Marketing Japan Inc.

20

BUSINESS REPORTBusiness Conditions by Segment

Net sales

Enterprise¥195,828 million

Operating income ¥10,070 million

Sales to the financial sector increased, reflecting strong revenue from large projects such as SI projects for securities
firms and investment product sales support systems for shinkin banks.
Sales to the manufacturing sector grew on the back of steady revenue from a demand forecasting system project for adrinks manufacturer and a large commercial data gathering terminal project for a food manufacturer.
Sales to the distribution sector rose, bolstered by steady revenue from a POP production system project for the retailindustry, a large office MFP project for the telecommunications industry, and large network camera projects for security
firms and trading companies.
At Canon IT Solutions Inc., sales of SI services rose slightly due to the acquisition of numerous projects mainly for the
manufacturing industry, offsetting the absence of large projects for the financial industry recorded the previous year.
Canon IT Solutions also performed well in data center services and won a number of large infrastructure system projects
as well as projects in other areas such as embedded system projects. As a result, it reported an increase in sales.
Meanwhile, sales of office MFP printers in the Enterprise segment decreased, reflecting the absence of large projects
recorded the previous year and tighter control of unprofitable projects. Sales of laser printers grew, largely due to anorder received for a large project for a life insurance company.

Laser printers

21

Canon Marketing Japan Inc.

Notice of Convocation
Reference Documents For General
Meeting of Shareholders

As a result, net sales in this segment totaled ¥195,828 million (up4.1% from the previous year). Operating income was ¥10,070
million (up 15.4%) largely due to higher gross profit as a result of
increased sales and strong performances in highly profitablebusinesses at Canon IT Solutions.
Nishi-Tokyo Data Center

Area¥268,309 million
Operating income ¥14,398 million
Net sales

Business Report

Business Conditions by Segment

Financial Statements

Consolidated Financial
Statements

Sales of business equipment declined, reflecting weak shipment volumes to SMEs despite expansion in sales of office
MFPs mainly among core customers. Meanwhile, sales of laser printers grew, despite their continued integration in office
MFPs, thanks to progress expanding sales to specific industries and active proposal of introduction to coincide with thereplacement of business PCs.
In the Area segment, IT solutions are provided mainly by Canon System & Support Inc. This Year, shipment volumes
increased sharply due to the progressive replacement of business PCs among SMEs as a result of the end of extended
support for Windows7. Sales also grew, reflecting bundled proposals of the cloud-based IT support service for Office 365
HOME, the antivirus software ESET and various types of software for increasing business efficiency upon thereplacement of business PCs.

Audit Reports

As a result, net sales in this segment totaled ¥268,309 million (up 4.2%
from the previous year). Operating income amounted to ¥14,398
million (up 19.2%) due to higher gross profit associated with increased
sales of highly profitable IT solutions.

IT support cloud service,
HOME“ESET” security software

Canon Marketing Japan Inc.

22

BUSINESS REPORT¥43,675 million
Operating income ¥1,617 million
Net sales

Business Conditions by Segment

Professional(Production Printing)Sales decreased due to weak business related to continuous feed printers and wide-format printers.

(Industrial Equipment)
Sales declined due to the termination of a distribution agreement with an overseas manufacturer who was a major
customer in the semiconductor sector, despite a strong performance in maintenance services associated with increased
plant utilization rates.

(Healthcare)
Sales rose due to good performances in IT systems for hospitals and digital radiography.
As a result, net sales in this segment totaled ¥43,675 million (down 5.9% from the previous year). However, operating
income reached ¥1,617 million (up 89.9%), mainly due to cost cutting.

Digital radiography

23

Canon Marketing Japan Inc.

Notice of Convocation(2) Capital Expenditures
The capital expenditures by the Group during this fiscal year totaled ¥19,921 million, which are mainly as rented assets,
tools, fixtures and fittings, and ancillary facilities at our Nishi-Tokyo Data Center.

Reference Documents For General
Meeting of Shareholders(3) Issues to be Addressed

Business Report

We expect that the outlook for the Japanese economy will remain unclear due to decline in demand caused by the
consumption tax hike as well as uncertainty surrounding the outcome of trade disputes and overseas economies, the impact
of fluctuations in in financial and capital markets, and other factors.
Against this economic backdrop, the domestic market for Canon’s major products, in other words, the digital cameras, inkjet
printers, office MFPs and laser printers that we sell, is expected to contract and we believe we must urgently formulate andimplement strategies to maintain profitability by increasing productivity even in a contracting market. On the other hand, we
expect that the market for IT solutions, which we position as a growth business, will remain continue to show an expansionary
trend. Our challenge in the IT solutions business is to leverage the strong customer base we built up through document
solutions and the IT technological capability and various other strengths we acquired through M&A and other means tofurther strengthen our business domain where we can demonstrate our characteristics.

Consolidated Financial
Statements

We will work to expand our business operations and improve our performance by implementing the initiatives
described below.

1. Maintain the profitability of Canon’s major products・Interchangeable lens digital cameras

 e will seek to expand sales by strengthening our lineup of mirrorless cameras focusing on full-frame models. We willW
also seek to reenergize the market as the leading digital camera manufacturer.

・Inkjet printers

Financial Statements

We will work to expand high added value models for home use and business printers and large capacity tank printers.

・Office MFPs

 e will seek to increase our market share through competitive products and well-aimed solution proposals as well asWfurther improve efficiency of our maintenance services.

・Laser printers e will continue to expand sales to specific industries with large printing volumes to increase our market share andW
we will translate this into increase sales of cartridges.
Audit Reports

2. Strengthen IT solutions business・Achieve high productivity in SI services business and expansion in business scaleWe will make effective use of our customer base to expand business specific solutions and we will also seek toshift from existing contract-based system development to proposal-based development and service
provision-based SI utilizing packaged software.
Canon Marketing Japan Inc.

24

BUSINESS REPORT・Increase added value of IT services businessT he Nishi-Tokyo Data Center, including Phase II which will go into operation this year, will play a central role inexpanding added value business such as system monitoring and security operation and cloud-based services in a bid
to strengthen profitability.

・Expand IT solutions business for SMEs

 s an “IT concierge” that meets the IT needs of SMEs, our largest customer base, we will increase profitability byA
proposing solutions based on backbone packaged software and security products and by seeking to expand
IT-related maintenance services.

・Expand BPO business e will establish businessspecific BPO models based on a thorough knowledge of each type of business and provide
W
services with high levels of expertise and productivity.

・Secure SEs and professional human resources e will seek to increase SEs and human resources with expertise in each business area to accelerate the realization ofW
a growth scenario in the IT solutions business.
Basic Strategy under the Three-Year Management Plan for 2020-2022

Transform into a highly profitable business group
Aim to maximize profitability by providing solutions ahead of changes in society and customers

Growth strategy
Focus on the ITS BusinessResolve social issues
Resolve management issues
Provide high-value added
business

IT technical strength25

Canon Marketing Japan Inc.

Canon brandReinforcementof profitability
 aintain profitability ofM
Canon’s main businesses
Enhance internal
productivity using IT

Customer base

Notice of Convocation(4) Status of Assets and Earnings
Consolidated
48th Fiscal Year

49th Fiscal Year

50th Fiscal Year

51th Fiscal Year52th Fiscal YearNet sales

646,002629,313632,189

621,591

621,134

Operating income

26,647

27,67630,40628,941

32,439Ordinary income

28,04028,71731,491

30,51933,937

Profit attributable to owners ofparent (Millions of yen)
Profit attributable to owners ofparent per share (Yen)

15,67018,161

20,67920,82622,250120.84140.06

159.48160.61

171.60Total assets

486,502497,727

510,832

498,790503,698

Net assets

277,438

280,919

297,522

303,570

325,092(Millions of yen)

(Millions of yen)
(Millions of yen)(Jan. 1, 2018
to Dec. 31, 2018)(Jan. 1, 2019
to Dec. 31, 2019)

Reference Documents For General
Meeting of Shareholders(Millions of yen)(Jan. 1, 2017
to Dec. 31, 2017)

Business Report(Millions of yen)(Jan. 1, 2016
to Dec. 31, 2016)

Consolidated Financial
Statements(Jan.1, 2015
to Dec.31, 2015)

Note: Profit attributable to owners of parent per share is calculated based on the weighted average number of outstanding shares during the year.

(5) Main Business
Consumers

Provides products such as digital cameras and inkjet printers primarily to individual customers.

Enterprise

Provides Canon input and output devices and solutions that contribute to solving businessproblems for large companies.

Area

Provides input and output devices and solutions that help customers solve business problems forsmall and medium-sized businesses in Japan.

Professional

Provides solutions for customers in each area.
(Production Printing) Provides high-speed continuous feed printers and high-speed cut sheet
printers to the printing industry.
(Industrial Equipment) Provides products such as semiconductor manufacturing systems andinspection and measurement devices mainly to semiconductor manufacturers and otherelectronics device manufacturers.
(Healthcare) Provides various modalities and solutions to medical institutions, as well as dispensing
machines and IT systems to pharmacies

Canon Marketing Japan Inc.

Financial Statements

Business

Audit Reports

Segment

26

BUSINESS REPORT(6) Main Location of Operations
The Company

Principal Subsidiaries

Headquarters

Tokyo

Canon IT Solutions Inc.

Makuhari Office

Chiba

Canon System & Support Inc.

Sapporo Branch

Hokkaido

Sendai Branch

Miyagi

Nagoya Branch

Aichi

Osaka Branch

Osaka

Hiroshima Branch

Hiroshima

Fukuoka Branch

Fukuoka

Konan Office

Canon Production Printing Systems Inc.

Tokyo

Canon Lifecare Solutions Inc.

(7) Employees
Consolidated

27

Number of Employees

Change from the end of the previous year

17,001 persons

Decrease of 281 persons from the previous year

Segment

Number of Employees

Change from the end of the previous year

Consumers

547 persons

Decrease of 19 persons from the previous year

Enterprise

5,080 persons

Decrease of 81 persons from the previous yearArea

6,309 persons

Decrease of 36 persons from the previous year

Professional

1,139 persons

Decrease of 277 persons from the previous year

Other

3,926 persons

Increase of 132 persons from the previous year

Canon Marketing Japan Inc.

Notice of Convocation(8) Parent Company and Principal Subsidiaries
ParentCompany
Name

Location

Activities

Number of Voting
Rights (Ratio of
Voting Rights)

Relation with the Company

Canon Inc.

Ohta-kuTokyo

Development and production in the fieldof the office, imaging systems andindustrial equipment

757,086(58.5%)The Company is comprehensively conducting to sales,
services and marketing of the products manufactured by
the Parent Company in the Japan market.

Reference Documents For General
Meeting of Shareholders

Parent Company

Consolidated Financial
Statements

Business Report

Matters about the Transactions with Parent Company, etc.
The Company holds the exclusive right to sell within Japan all products, excluding semiconductor exposure devices and liquid
crystal substrate exposure devices, manufactured by Parent Company under the Canon brand. In purchasing such products, theterms are negotiated and determined for each year by presenting the preferred prices from the Company taking into accountmarket prices.
The Company sells consumables for office equipment to the Parent Company based on the same terms as regular transactions.
The Company lends funds to the Parent Company by the interest rates determined reasonably taking into account market rates.
Thus, the board of directors assesses that the Company is conducting business activities and making management decisions
based on the Company’s own management judgments, certain independence from the Parent Company is secured, and theCompany’s profit is not harmed in the transactions with the Parent company.
Principal Subsidiaries
BusinessCanon IT Solutions Inc.

3,617

100.0

SI and consulting, IT service and development and sale ofvarious softwares

Canon System & Support Inc.

4,561

100.0

Consulting, sales, support and maintenance services for
Canon products and the IT solutions of other companies

Canon Production Printing Systems Inc.

2,744

100.0

Sales of high-speed continuous feed printers and high-speed cut
sheet printers as well as consumables, provision of maintenanceservices, and provision of printing services, etc. etc.

Canon Lifecare Solutions Inc.

2,533

100.0

Sales of medical equipment, healthcare related equipment
and consumables and medical image systems

Financial Statements

Capital Stock Ratio of Voting Rights(millions of yen) of the Company (%)

Audit Reports

Company Name

Consolidated Status
1. The number of consolidated subsidiaries was 19.
2. T he Company transferred all shares of its subsidiary Canon Lifecare Solutions Inc. to Canon Medical Systems
Corporation on January 1, 2020.
Canon Marketing Japan Inc.

28

BUSINESS REPORT

2. Status of Shares of the Company(1) Total Number of Shares Authorized 299,500,000 shares(2) Total Number of Issued Shares, Capital Stock, Number of Shareholders
As of the end of the Previous YearAs of the end of This Year

151,079,972-

151,079,972

73,303,082,757-

73,303,082,757

Total number of issued shares (shares)
Capital stock (yen)Change during This Year

12,406

Number of shareholders (persons)

Decrease of 964

11,442(3) Major Shareholders
Name of Shareholders

Number of Shares Held (thousands of shares)

Shareholding Ratio (%)

Canon Inc.

75,70858.4

Canon Marketing Japan Group Employee Stock Ownership Association

5,753

4.4

The Master Trust Bank of Japan, Ltd. (Trust account)

3,752

2.9

Japan Trustee Services Bank, Ltd. (Trust account)

2,611

2.0

STATE STREET BANK AND TRUST COMPANY 505001

1,623

1.3

Japan Trustee Services Bank, Ltd. (Trust account 9)

1,405

1.1

The Bank of New York, Treaty JASDEC Account

1,250

1.0

Canon Marketing Japan Group Business Partner Stock Ownership Association

1,215

0.9

Japan Trustee Services Bank, Ltd. (Trust account 5)

1,139

0.9

Mizuho Bank, Ltd.

1,001

0.8

Note: The shareholding ratio is calculated by deducting the number of treasury shares (21,413,743 shares) from the total number of issued shares.

(4) Shareholding Ratio by Category
Financial
institutions

11.3%

Securities companies 0.7%29Canon Marketing Japan Inc.

Other domestic companies

51.1%

Foreigncompanies, etc.

11.2%

Individuals
and others

11.5%

Treasury shares

14.2%

Notice of Convocation

3. Status of Directors and Audit & Supervisory Board Members(1) Directors and Audit & Supervisory Board Members
President & Representative Director
Executive President

Masahiro Sakata

Business in Charge or Important Concurrent Posts

Yoshiyuki Matsusaka

Director Senior Vice President

Masachika Adachi

Director of Enterprise Business Unit

Director Vice President

Shiro Hamada

Director in charge of Group Accounting and Group Audits

Director

Akio Dobashi

Outside Director of Maeda Corporation

Director

Yoshio Osawa

Outside Director of Citizen Watch Co., Ltd.

Audit & Supervisory Board Member

Masahiro Shimizu

Audit & Supervisory Board Member

Shinichi Inoue

Audit & Supervisory Board Member

Kunihiko Tedo

Audit & Supervisory Board Member

Nobuyasu Kusumi

Audit & Supervisory Board Member

Shigeo Hasegawa

Consolidated Financial
Statements

Director Senior Vice President

Director in charge of Group Planning and Group Communications
Director in charge of Digital Marketing and EC Planning Center
Director of Consumer Business Unit
Director in charge of Video Solutions Co-creation Center

Reference Documents For General
Meeting of Shareholders

Name

Business Report

Position

Canon Marketing Japan Inc.

Audit Reports

Financial Statements

Notes: 1. Mr. Akio Dobashi and Mr. Yoshio Osawa all of whom are Directors are Outside Directors.
		 2. Mr. Kunihiko Tedo, Mr. Nobuyasu Kusumi and Mr. Shigeo Hasegawa all of whom are Audit & Supervisory Board Members are Outside Audit &Supervisory Board Members.
		 3. The Company has notified Directors Mr. Akio Dobashi and Mr. Yoshio Osawa as independent directors and Audit & Supervisory Board Members
Mr. Nobuyasu Kusumi and Mr. Shigeo Hasegawa as independent Audit & Supervisory Board Members to Tokyo Stock Exchange, Inc. on which
the Company is listed as provided under the regulations of Tokyo Stock Exchange, Inc.
		 4. Mr. Masahiro Shimizu is an Audit & Supervisory Board Members and has accounting experience in the Company for many years and has awealth of expertise in finance and accounting.
		 5. Mr. Kunihiko Tedo is Audit & Supervisory Board Members and has accounting experience in Canon Inc., our parent company, for many years
and has a wealth of expertise in finance and accounting.
		 6. Mr. Shigeo Hasegawa is Audit & Supervisory Board Member and qualified as a Certified Public Accountant and has a wealth of expertise infinance and accounting.
		 7. The Company has entered into contracts, in accordance with the Articles of Incorporation, with the Outside Director and the Audit &Supervisory Board Members to limit their liabilities to compensate damages under Paragraph 1, Article 423 of the Companies Act of Japan, tothe limit of amount set forth in the Paragraph 1, Article 425 of the Companies Act of Japan.

30

BUSINESS REPORT(2) Remuneration to Directors and Audit & Supervisory Board Members
Directors 7 persons ¥296 million
Audit & Supervisory Board Members 5 persons ¥104 million
Notes: 1. The total amount of remuneration paid to 2 Outside Directors and 3 Outside Audit & Supervisory Board Members is ¥77 million.
		 2. The above number includes one Director who retired at the close of the 51st Ordinary General Meeting of Shareholders held on March 27,
2019.
		 3. Directors’ remuneration include provision for directors’ bonuses for this fiscal year in the amount of ¥35 million.

(3) Status of Outside Director and Outside Audit & Supervisory Board Members
Relation Between Important Organization of Concurrent Post and the Company
Name

Concurrent Post

Organization of Concurrent Post

Relation with The Company

Akio Dobashi(Outside Director)

Outside Director

Maeda Corporation

No special relation

Yoshio Osawa(Outside Director)

Outside Director

Citizen Watch Co., Ltd.

No special relation

Principal Activities
Name

Principal Activities

Akio Dobashi(Outside Director)

Attended 14 out of the 16 Board of Directors meetings held during this fiscal year, and provided input based on
his experience and knowledge in the field of corporate management.

Yoshio Osawa(Outside Director)

Attended all 16 Board of Directors meetings held during this fiscal year, and provided input based on his
experience and knowledge in the field of corporate management.

Kunihiko Tedo
(Outside Audit & Supervisory
Board Member)
Nobuyasu Kusumi(Outside Audit & Supervisory
Board Member)
Shigeo Hasegawa(Outside Audit & Supervisory
Board Member)

31

Canon Marketing Japan Inc.

Attended all of 16 Board of Directors meetings and 18 out of 20 Audit & Supervisory Board meetings held
during this fiscal year and provided input based on his experience and knowledge in the field of accounting.
Attended all of 16 Board of Directors meetings and all of 20 Audit & Supervisory Board meetings held during
this fiscal year, and provided input based on his experience and knowledge in the field of corporate
management.
Attended 15 out of 16 Board of Directors meetings and all of 20 Audit & Supervisory Board meetings held
during this fiscal year and provided input based on his insight as a Certified Public Accountant when necessary.

Notice of Convocation

4. Status of Accounting Auditor(1) Name of Accounting Auditor

Reference Documents For General
Meeting of Shareholders

Ernst & Young ShinNihon LLC(2) Remuneration and Other Amounts to Accounting Auditor for This Fiscal Year(i) R emuneration and other amounts payable by the Company for the services defined in Paragraph 1, Article 2of the Certified Public Accountants Act¥108 million(ii) Total amount of cash and other financial benefits payable by the Group to the Accounting Auditor¥183 million
Business Report

AmountConsolidated Financial
Statements

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 Act. Accordingly, the amounts shown in (i) above represent total amounts of remuneration and other amounts forboth of these auditing services.
		 2. The Company pays consideration to accounting auditors for work concerning agreed upon procedures other than the work specified in Article
2, Paragraph 1 of the Certified Public Accountings Act.
		 3. Reason that the Audit & Supervisory Board reached an agreement regarding the remuneration to Accounting Auditor: The Audit & Supervisory
Board has received necessary documents and reports from the Directors, related internal divisions, and the Accounting Auditor, in addition toconfirming the audit plan, status of the performed audit for the previous year, and the estimated remuneration for this fiscal year. As a result,the Audit & Supervisory Board reached an agreement regarding the remuneration to Accounting Auditor, upon judging it to be a rational level
for maintaining and improving audit quality.

(3) Policy Regarding Decision on Either Dismissal or Non-Reappointment of the Accounting Auditor

Audit Reports

Financial Statements

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.
In addition to the above, should anything occur to negatively impact the qualifications or independence of the
Accounting Auditor, making it unlikely that the Accounting Auditor will be able to properly perform an audit, the Audit &Supervisory Board will decide the contents of the item to be proposed at a General Meeting of Shareholders regarding
the dismissal or non-reappointment of the Accounting Auditor.

Canon Marketing Japan Inc.

32

BUSINESS REPORT

5. Policy Regarding Decision of Dividends from Surplus, etc.
The Company made its basis policy, with respect to profit distribution, to pay the dividends based on a consolidated
payout ratio of 30% taking into consideration comprehensively the medium-term profit plan, investment plan, and cash
flows to be generated.
As to the dividends for this fiscal year, the Company plans to pay a year-end dividends of 30 yen per share, totaling 60
yen per share (consolidated payout ratio of 35.0%) as a full-year dividends together with the interim dividends (30 yen
per share).
Note: 	The amount and the number of shares described in this report are rounded down to the nearest number of the units indicated. Profit attributableto owners of parent per share are rounded off to two decimal places.

33

Canon Marketing Japan Inc.

Consolidated Balance Sheets

Notice of Convocation

CONSOLIDATED FINANCIAL STATEMENTS

As of
Dec. 31, 2019

As of
Dec. 31, 2018

¥377,403
53,993112,666¥383,349
65,071
117,041500

 Assets

As ofDec. 31, 2019

As of
Dec. 31, 2018

¥120,023¥129,903

51,54275,831

Reference Documents For General
Meeting of Shareholders(Millions of yen, amounts less than one million yen are rounded down)

Lease obligations

72

100

70,500Accrued expenses

17,855

16,676

Accrued Income taxes

8,235

6,967

Consumption taxes payable

5,901

4,063

Provision for bonuses

3,373

3,437

Provision for directors' bonuses

99

79

Provision for product warranties

651

447

Provision for loss on order received

189

147

32,101

22,151

Non-current liabilities

58,58265,317

Lease obligations

103

116

33,281

31,182Work in process

206

1,191

Raw materials and supplies

622

647

Short-term loans receivable

170,01290,014

6,197

7,792

(75)

(91)

126,295

115,441

Property, plant and equipment

82,813

71,987

Buildings and structures, net

26,94828,657

99

112

3,315

3,059

Rental assets, net

9,403

10,842

Land

28,91828,91831

63

Merchandise and finished goods

Other
Allowance for doubtful receivables
Non-current assets

Machinery, equipment and vehicles, net
Furniture and fixtures, net

Lease assets, net

Net defined benefit liabilities

53,95659,887

Shareholders' equity

326,979

314,156

5

Capital stock

73,30373,303316

Capital surplus

82,82082,820Retained earnings

202,783

189,957

Treasury stock333

Software

4,148

4,940

315

1,019
4,264

5,265

Right of using facilities

1,042

195,220

4,469
2

29

Allowance for long-term continuous service rewards

3,480

14,095

Lease assets-

Deferred tax liabilities

178,606

Intangible assets

Construction in progress

Other

Other
Total liabilities Net assets22

Investments and other assets

39,011

38,188(31,926)(31,924)

Investments in securities

11,037

7,985

Accumulated other comprehensive Income(2,504)(11,129)
2,518

Other

Long-term loans receivable35

36Valuation difference on available-for-sale securities

3,929

Net defined benefit asset

393

304

Deferred gains or losses hedges

11

1

Deferred tax assets

20,792

23,039Foreign currency translation adjustments

51

75

Lease deposits

4,358

4,423

Remeasurements of defined benefit plants(6,497)(13,725)

Other

2,775

2,832

Non-controlling interests

616

542

Allowance for doubtful receivables

(382)

(432)

Total net assets

325,092

303,570¥503,698¥498,790

Total liabilities and net assets¥503,698¥498,790

Total assets

Consolidated Financial
Statements

Securities

Notes and accounts payable

Canon Marketing Japan Inc.

Financial Statements

Notes and accounts receivable

Current liabilities

Audit Reports

Cash and deposits

Business Report Liabilities

Current assets

34

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Income

From January 1, 2019
to December 31, 2019

From January 1, 2018
to December 31, 2018

Net sales¥621,134¥621,591

Cost of sales

420,107403,417Gross profit

201,026

218,173

Selling, general and administrative expenses

168,586

189,231

Operating income

32,43928,941Non-operating income

1,667

1,807

Interest income

196

197

Dividend income

154

153

Insurance income

767

547

Gain on investments in investment partnerships

247

494

302

413

Non-operating expenses

169

229

Interest expenses

12

12

Other

157

216

33,93730,519

15

830

Other

Ordinary income
Extraordinary income
Gain on sales of non-current assets

13

126

Gain on sales of investments in securities

2

489

-

214

649

641

Loss on sales and disposal of non-current assets

206

311

Impairment loss

82

15

Loss on disaster

-

64

329

158

Gain on sales of shares of subsidiaries and associates
Extraordinary losses

Loss on valuation of investment securities
Reorganization expenses

-

57

Other

31

34

Income before income taxes

33,30230,708

Income taxes-current

12,626

9,893

Income taxes-deferred(1,663)(77)

Profit22,33920,89389

66¥ 22,250¥ 20,826

Profit attributable to non-controlling interests
Profit attributable to owners of parent

35(Millions of yen, amounts less than one million yen are rounded down)

Canon Marketing Japan Inc.

Non-Consolidated Balance Sheets

Claims provable in bankruptcy, claims provable in rehabilitation and other

Long-term prepaid expenses
Deferred tax assets
Lease deposits
Other
Allowance for doubtful receivables
Total assets

As ofDec. 31, 2019

As of
Dec. 31, 2018

¥344,084
37,246
1,993
8,214
90,034500
27,318
512
1,692
832
170,206
5,193
16
384
(61)
145,287
52,784
13,178
481
99
1,660
9,402
27,952
10
3,377
3,266
110
0
89,124
8,729
63,366293
826
13,058
1,905
1,272
(328)
¥489,371¥351,466
55,072
2,409
8,811
89,77270,50025,999
74
529
1,799
589
90,400
4,848
2
729
(72)
144,118
54,87913,764
494
112
1,740
10,84027,901
24
4,204
4,091
1
110
0
85,034
5,928
63,696299
661
11,545
1,927
1,307
(331)
¥495,585

As ofDec. 31, 2019

As of
Dec. 31, 2018

¥153,708
1,678
47,81861,5007
2,753
14,324
6,554
2,933
10,504
3,343
1,718
35
534
38,237
4
33,868673
3,691
191,945¥168,781
1,800
71,52956,10027
2,317
13,8975,617
1,754
10,452
3,228
1,571
40
444
34,282
5
29,250638
4,387
203,064

294,482
73,30385,20485,1985
167,905
2,853
165,051
81,70083,351(31,930)
2,943
2,932
11
297,426¥489,371

290,59373,30385,20485,1985
164,013
2,853
161,160
81,70079,460(31,928)
1,927
1,926
1
292,521¥495,585

Reference Documents For
General Meeting of Shareholders(Millions of yen, amounts less than one million yen are rounded down)

Canon Marketing Japan Inc.

Consolidated Financial
Statements
Financial Statements
Audit Reports

Current liabilities
Electronically recorded obligations - operating
Accounts payable
Short-term loans payable
Lease obligations
Accounts payable - otherAccrued expenses
Accrued Income taxes
Consumption taxes payable
Advances received
Deposits received
Provision for bonuses
Provision for directors' bonuses
Provision for product warranties
Non-current liabilities
Lease obligations
Provision for retirement benefits
Allowance for long-term continuous service rewards
Other
Total liabilities Net assets
Shareholders' equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Treasury stock
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Deferred gains or losses hedges
Total net assets
Total liabilities and net assets

Business Report Liabilities

Reference Assets
Current assets
Cash and deposits
Notes receivable
Electronically recorded monetary claims - operating
Accounts receivable
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Advance payment - trade
Prepaid expenses
Short-term loans receivable
Accounts receivable - other
Forward exchange contracts
Other
Allowance for doubtful receivables
Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery
Furniture and fixtures
Rental assets
Land
Lease assets
Intangible assets
SoftwareLease assets
Right of using facilities
Other
Investments and other assets
Investments in securities
Shares of subsidiaries and associates

Notice of Convocation

NON-CONSOLIDATED FINANCIAL STATEMENTS

36

NON-CONSOLIDATED FINANCIAL STATEMENTS

Non-Consolidated Statements of Income

From January 1, 2019
to December 31, 2019

From January 1, 2018
to December 31, 2018

Net sales¥473,229¥475,741

Cost of sales

341,303

343,063

Gross profit

131,926

132,677

Selling, general and administrative expenses

116,257

116,528

Operating income

15,66916,148Non-operating income

3,513

3,672

Interest income

193

166

Dividend income

2,204

2,078

Insurance income

758

541

Gain on investments in investment partnerships

246

494

Other

111

391

195

205

Interest expenses

57

49

Share related expenses

53

55

Other

84

101

18,987

19,615

1

3,334

Non-operating expenses

Ordinary income
Extraordinary income
Gain on sales of non-current assets

1

4Gain on sales of investments in securities-

489

Gain on extinguishment of tie-in shares

-

2,659

Gain on sales of shares of subsidiaries and associates

-

180

581

620

Loss on sales and disposal of non-current assets

193

147

Impairment loss

50

14

-

51

Extraordinary losses

Loss on disaster

329-

Loss on valuation of investment securities

8158

Bad debt expenses for subsidiaries and associates

-

247

Other

-

2

18,40722,328

Income taxes-current

7,088

5,621

Income taxes-deferred(1,969)(252)¥ 13,287¥ 16,959

Loss on valuation of shares of subsidiaries and associates

Income before income taxes

Profit37(Millions of yen, amounts less than one million yen are rounded down)

Canon Marketing Japan Inc.

Notice of Convocation

AUDIT REPORTS
AUDIT REPORT OF ACCOUNTING AUDITOR ON CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors
Canon Marketing Japan Inc.

Report of Independent Auditors

February 10, 2020

Reference Documents For General
Meeting of Shareholders(TRANSLATION)

Ernst & Young ShinNihon LLC

Shigeru Sekiguchi Certified Public Accountant

Designated and Engagement Partner

Keiichi Wakimoto Certified Public Accountant

Designated and Engagement Partner

Mamoru Wakino Certified Public Accountant

Business Report

Designated and Engagement Partner

Pursuant to Paragraph 4, Article 444 of the Companies Act, we have audited the accompanying consolidated financial statements, which comprisethe consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets and the notes tothe consolidated financial statements of Canon Marketing Japan Inc. (the “Company”) applicable to the fiscal year from January 1, 2019 throughDecember 31, 2019.

Consolidated Financial
Statements

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the accounting
principles generally accepted in Japan, and for designing and operating such internal control as management determines is necessary to enable
the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

Financial Statements

Auditors’ Responsibility
Our responsibility is to express an opinion from an independent perspective on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. The purpose of an audit of the consolidated financial statements is not to express an opinion
on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal controls relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in
the circumstances. An audit also includes evaluating the appropriateness of accounting policies used, the method of their application, and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Audit Reports

OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position and results ofoperations of the Canon Marketing Japan Group, which consisted of the Company and consolidated subsidiaries, applicable to the fiscal year
ended December 31, 2019 in conformity with the accounting principles generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

Canon Marketing Japan Inc.

38

AUDIT REPORTS

AUDIT REPORT OF ACCOUNTING AUDITOR ON NON-CONSOLIDATED FINANCIAL STATEMENTS(TRANSLATION)
The Board of Directors
Canon Marketing Japan Inc.

Report of Independent Auditors

February 10, 2020

Ernst & Young ShinNihon LLC

Shigeru Sekiguchi Certified Public Accountant

Designated and Engagement Partner

Keiichi Wakimoto Certified Public Accountant

Designated and Engagement Partner

Mamoru Wakino Certified Public Accountant

Designated and Engagement Partner

Pursuant to Item 1, Paragraph 2, Article 436 of the Companies Act, we have audited the accompanying non-consolidated financial statements, which
comprise the non-consolidated balance sheet, the non-consolidated statement of income, the non-consolidated statement of changes in net assets,
the notes to the non-consolidated financial statements, and the related supplementary schedules of Canon Marketing Japan Inc. (the “Company”)
applicable to the 52nd fiscal year from January 1, 2019 through December 31, 2019.
Management’s Responsibility for the Financial Statements and the Related Supplementary Schedules
Management is responsible for the preparation and fair presentation of these non-consolidated financial statements and the related supplementaryschedules in accordance with accounting principles generally accepted in Japan, and for designing and operating such internal control as
management determines is necessary to enable the preparation and fair presentation of the financial statements and the related supplementaryschedules that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion from an independent perspective on these non-consolidated financial statements and the related
supplementary schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the related
supplementary schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the related
supplementary schedules. The proceduresselected depend on the auditors’ judgment, including the assessment of the risks of material misstatementof the financial statements and the related supplementary schedules, whether due to fraud or error. The purpose of an audit of the non-consolidated
financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor
considers internal controls relevant to the entity’s preparation and fair presentation of the non-consolidated financial statements and the related
supplementary schedules in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used, the method of their application, and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements and the related supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the non-consolidated financial statements and the related supplementary schedules referred to above present fairly, in all material
respects, the financial position and results of operations of Canon Marketing Japan Inc. applicable to the 52nd fiscal year ended December 31, 2019 inconformity with accounting principles generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

39

Canon Marketing Japan Inc.

Notice of Convocation

AUDIT & SUPERVISORY BOARD’S REPORT

Reference Documents For General
Meeting of Shareholders

Audit Report
We, Audit & Supervisory Board has discussed and prepared this Audit Report based on the audit reports prepared by each of the Audit & Supervisory Board Members pertaining to the conductof duties by the Directors of Canon Marketing Japan Inc. during the 52nd fiscal year from January l, 2019 to December 31, 2019, and reports as follows.

Consolidated Financial
Statements

Business Report

1. Methods and Substance of Audit by Audit & Supervisory Board Members and Audit & Supervisory Board(1) We decided on the auditing policies and the allocation of work duties, etc., received a report on the auditing work performed and the results from each Audit & Supervisory Board Member,and received a report on the status of the work executed from the Directors and the Independent Auditor and requested their explanations as necessary.
(2) While confirming to the auditing standards as decided by us, the auditing policies and the allocation of duties, etc., each Audit & Supervisory Board Member endeavored to facilitate mutual
understanding with the Directors, the internal audit office and other employees, etc. to collect information and improve the auditing environment. Our audit procedures were as follows.
\\i)	We attended the meetings of the Board of Directors and other important meetings, received reports on the status of the work executed from the Directors and the employees andrequested their explanations as necessary, inspected material internal decision-making documents, etc., and investigated the status of the operations and assets of the headquarters
and major business sites. In addition, with respect to the subsidiaries, we communicated and exchanged information with the Directors and Audit & Supervisory Board Members of thesubsidiaries, and received reports on business from the subsidiaries as necessary.
ii)	The following systems (Internal Control System) were determined by a Board of Directors’ resolution and designed based on this resolution. We periodically received reports fromthe Directors, employees and others, requested explanations as necessary regarding the design and implementation of the Internal Control Systems, and expressed opinions on thesubstance of the decisions made by the Board of Directors with regard to the Internal Control Systems.
(a) A system for ensuring that the performance of duties by the Directors complies with the applicable laws and regulations and Articles of Incorporation.
(b)	A system for ensuring the Directors’ performance of the adequate operations of Canon Marketing Japan Group, which consists of the Company and its subsidiaries as stipulated
under Article 100, paragraphs l and 3 of the Ordinance for Enforcement of the Companies Act.
iii)	We examined the contents of the matters considered and the assessment and reasons detailed in this Business Report for the transactions with the Parent Company under Article 118 of
the Ordinance for Enforcement of the Companies Act, taking into account the status of the deliberations of the Board of Directors, etc.
iv)	We monitored and verified whether the independence of the Accounting Auditor was maintained and whether an appropriate audit was being undertaken, received reports from the
Accounting Auditor on the status of operations, and requested explanations as necessary. We also received reports from the Accounting Auditor stating that the necessary systems for
ensuring the appropriate execution of operations (pursuant to Article 131 of the Rules of Corporate Accounting) were duly developed in line with the Quality Control Standards for
Auditing (issued by the Business Accounting Council on October 28, 2005), and other relevant standards, and requested explanations as necessary.
Based on the above procedures, we examined the Business Report and its supplementary schedules, the non-consolidated financial statements for the relevant fiscal year (the balance sheets,
the statements of income, the statement of changes in equity and the notes to the non-consolidated financial statements) and their supplementary schedules as well as the consolidated
financial statements for the relevant fiscal year (the consolidated balance sheets, the consolidated statements of income, the consolidated statements of changes in equity and the notes to theconsolidated financial statements).

Audit & Supervisory Board, Canon Marketing Japan Inc.
Audit & Supervisory Board Member (full time) Masahiro Shimizu
Audit & Supervisory Board Member (full time) Shinichi Inoue
Audit & Supervisory Board Member (full time) Kunihiko Tedo
(Outside Audit & Supervisory Board Member)
Audit & Supervisory Board Member (full time)(Outside Audit & Supervisory Board Member)
Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)

Audit Reports

February 12, 2020

Financial Statements

2. Results of Audit(1) Results of examination of the Business Report, etc.
a) In our opinion, the business report and its supplementary schedules conformity with the applicable laws and regulations of Japan and the Articles of Incorporation of the Company andfairly present the state of the Company’s affairs;b) We have found no misconduct or material fact constituting a violation of any applicable laws and regulations of Japan or the Articles of Incorporations in connection with the Directors’
performance of their duties; andc) In our opinion, the substance of the decisions made by the Board of Directors with regard to the Internal Control Systems is appropriate. Furthermore, we found no matters that require
noting with regard to the description in the Business Report and the Directors’ performance of their duties in connection with the relevant internal control systems; andd) With respect to the transactions with the Parent Company, etc. that are described in this Business Report, we have found no matters that require noting with regard to the mattersconsidered by Board of Directors and the Board of Directors’ assessment and factors that might be adverse to the Company’s interests.
(2)	Results of examination of the financial statements and their supplementary schedules
In our opinion, the auditing methods used and the conclusions reached by the Accounting Auditor, Ernst Young ShinNihon LLC, are appropriate.
(3) Results of examination of the consolidated financial statements
In our opinion, the auditing methods used and the conclusions reached by the Independent Auditor, Ernst Young ShinNihon LLC, are appropriate..

Nobuyasu Kusumi
Shigeo Hasegawa

Canon Marketing Japan Inc.

40