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