A company that handles its own shareholder services, or a shareholder services agent handling shareholder services for 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, and shall outsource or transfer, as the case may be, the handling of the shareholder services to a or another shareholder services agent within 2 months, calculated from the day following its receipt of the letter of disposition from this Commission. If the company is unable to find an agent willing to take over as the successor for handling of the shareholder services, or if this Commission deems necessary, a shareholder services agent shall be appointed by the institution designated by this Commission to handle the company's shareholder services.
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.