Global Corporate Governance Guidelines against tenure limits in excess of 12 – The board fulfilling its fiduciary duty non-executive directors and report on years. to shareholders (eg, serious their activities to shareholders. Any business conduct or lack of committee should have the authority AllianzGI believes that officers and supervision allegations against the to engage independent advisers directors should only be eligible for company or individual board where appropriate at the company’s indemnification and liability protection members); expense. if they have acted in good faith on – Reliability of the accounts and/or company business and were found the auditor’s report; Audit committee innocent of any civil or criminal charges – Substantial reporting and/or The board should disclose and explain for duties performed on behalf of the disclosure issues; or the main role and responsibilities of company. We do not support – Material legal proceedings the Audit Committee, as well as the proposals where liability cover extends instituted against the company or process by which the committee beyond legal costs, and which can: the directors in the year in question. reviews and monitors the quality of – L imit or eliminate all liability for audit, the robustness of internal monetary damages, for directors AllianzGI would also include failure to controls and the independence of the and officers who violate the duty of adequately guard against or manage external auditor. “Long-form” auditor care; or ESG risks including, for example, and audit committee reports should – Expand indemnification to cover climate risks, biodiversity-related risks become a standard reporting format acts, such as negligence, that are or human rights issues into account for all audit committees and external more serious violations of fiduciary when assessing the board. auditor. These should discuss the obligations than mere carelessness. scope of the audit, materiality AllianzGI believes it is important that thresholds, major audit and AllianzGI cannot support the election discharge of liabilities or ratification accounting issues reviewed by the of a director convicted of crime or of acts is sought for each individual Committee and the external auditor misconduct. We evaluate the re- director rather than the board as a during the year and their respective election of directors under whole. conclusions, as well as any identified investigation for civil or criminal areas of improvements. offenses on a case-by-case basis and AllianzGI may vote against individual usually abstain on their re-election. board members or the entire board AllianzGI normally expects the Audit where the directors have failed to take Committee to comprise directors who AllianzGI is concerned that non-voting action on the proposals approved by are unquestionably independent and directors, or censors, can have the shareholder meeting. have the appropriate qualifications, considerable influence on the board experience, skills and capacity to while not being directly accountable Board Committees contribute effectively to the to shareholders. Censors should be committee’s work. In companies with appointed only in the event of AllianzGI encourages all boards to co-determination structures, AllianzGI exceptional and temporary establish at least three key board would like to see at least 50% (and circumstances and if their presence committees specialising in audit, ideally a higher proportion) of adds significant value in terms of director nomination and compensation independent directors on the Audit board composition and board issues. Such committees constitute a Committee as well as an independent functioning. critical component of a robust committee chairperson. corporate governance structure and AllianzGI will consider composition, contribute to the proper functioning of AllianzGI also expects the Audit attendance and performance of the the board of directors. Other Committee Chairperson and, board during the year under review committees, such as a separate risk preferably, another committee when voting on proposals to committee, technology committee, member to have audit, accounting discharge the board of liabilities or sustainability committee, etc. may also or appropriate financial expertise, ratify the board’s acts. Where be appropriate depending on the unless there are stricter local laws. individual directors are not standing circumstances of the business. While for re-election during the year under we would not necessarily expect AllianzGI expects all companies to review, and we have concerns over companies to establish a separate establish a robust policy regulating board governance practices, we may sustainability committee, we would like and restricting the pledging of use the board discharge/ratification to understand how the board has company’s shares by executives. We proposals to express our concerns. anchored responsibility for expect the Audit Committee to sustainability matters on the board, oversee any pledging of shares by AllianzGI will vote against individual either with individual board members executive directors to ensure this directors or the whole board where or with a committee. The key board activity does not present undue risks there are concerns about: committees should be comprised of for minority shareholders. 8