A company that handles its own shareholder services, or a shareholder services agent handling shareholder services on behalf of a company, shall adopt an internal control system in accordance with the rules establishing standards for the internal control systems of shareholder services units that have been set by the institution designated by this Commission; dedicated employees shall be assigned to carry out internal audits on a regular or irregular basis and prepare written records of the audits, which are to be retained for inspection.
A company or a shareholder services agent shall handle shareholder services in accordance with laws and regulations and the provisions of its internal control system.
If a company or a shareholder services agent violates the provisions of either of the two preceding paragraphs, and is issued an official reprimand or a disposition by this Commission, it may no longer handle shareholder services for itself or for the company involved in the violation.
The rules establishing standards for the internal control systems of shareholder services units which are to be set by the institution designated by this Commission pursuant to paragraph 1 shall be submitted to this Commission for ratification. The same shall be true for any amendment to those rules.