Canon Inc.

March 5, 2003

Via e-mail:

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: S7-02-03
Standards Relating To Listed Company Audit Committees

Dear Mr. Katz:

I am a Senior Managing Director and Group Executive of Finance & Accounting Headquarters of Canon Inc. Canon Inc. is a foreign private issuer under the Securities Exchange Act of 1934 (the "Exchange Act") and has American Depositary Receipts for Common Shares registered under Section 12 of the Exchange Act and traded on the New York Stock Exchange.

We are in general supportive and appreciative of the Commission's exemption, in proposed Rule 10A-3(c)(2), for foreign private issuers which have, in accordance with home country legal or listing requirements, a board of auditors or statutory auditors separate from the board of directors. We believe that Rule 10A-3(c)(2) as proposed by the Commission will substantially eliminate the potential conflicts between Section 301 of the Sarbanes-Oxley Act of 2002 (the "SOA"), and the Japanese Commercial Code and corporate governance practice. As explained in other comments submitted to the Commission on proposed Rule 10A-3 (see, for example, Nippon Keidanren's comment letter dated February 18, 2003), the Japanese legal requirements for oversight of audits through the statutory auditor structure provide protections substantially equivalent to the objectives of the SOA. We believe that the long-standing Japanese statutory auditor structure will continue to be an equally-protective alternative to the audit committee structure, and accordingly we believe that there is no reason for a "sunset" date on the effectiveness of the Rule 10A-3(c)(2) exemption.

However, there are two issues which we request the Commission to consider:

audit committees. As you know, Japanese corporations will have the option, under the revised Japanese Commercial Code effective on April 1 of this year, of establishing audit committees of the board of directors, as an alternative to the current statutory auditors structure. Since this audit committee will be a committee of the board of directors and therefore will consist only of directors, it might not satisfy the "separate from the board of directors" requirement in Rule 10A-3(c)(2)(i)(B). We believe that audit committees established under the new Japanese law will be as effective in providing oversight of the corporation's financial reporting as the current statutory auditor structure, and therefore that the same regulatory requirements should be applicable to the Japanese statutory auditor and audit committee structures. Accordingly, we request that the "separate from the board of directors" requirement be deleted from proposed Rule 10A-3(c)(2)(i)(B).

responsibility of statutory auditors under the auditor independence rules. As stated above, we support and appreciate the Commission's recognition, in proposed Rule 10A-3(c)(2), of the Japanese statutory auditor structure. However, unlike Rule 10A-3, the Commission's final auditor independence rules (in its release dated January 28, 2003) define the "audit committee" to be the full board if the corporation does not have an audit committee. The ability of the statutory auditors to accomplish their responsibility under Japanese law, consistent with the objectives of the SOA, seems to be compromised by the non-recognition of statutory auditors under the auditor independence rules, and we request that the Commission reconcile this discrepancy.

We have a substantial number of U.S. shareholders and, through Canon's subsidiaries, U.S. employees, and we would prefer to maintain the listing of Canon's equity securities in the U.S. Accordingly, we respectfully request that Rule 10A-3(c)(2) be adopted by the Commission, taking our above-mentioned comments into consideration.

We appreciate the opportunity to comment on this issue, which could have a substantial effect on Canon's maintenance of the listing of its equity securities in the U.S. If there is anything you would like to discuss with us, please feel free to contact Mr. Seymour Liebman, Executive Vice President and General Counsel of Canon U.S.A., Inc. (tel. no. (516) 328-5191 or

Very truly yours,

Toshizo Tanaka
Senior Managing Director
Group Executive of Finance & Accounting Headquarters

CC: Mr. Seymour Liebman