Management on multilevel marketing activities
09:05 | 05/01/2019

VGP - The Government on March 12, 2018 issued Decree 40/2018/ND-CP on the management of multi-level marketing activities ("Decree 40"), replacing Decree 42/2014/ND-CP dated 14/05/2014 on the management of multi-level sale activities ("Decree 42").

Question: What are seven conditions for multi-level sale activities?

Answer:

Decree 40 raised the minimum charter capital and supplemented a number of conditions for registering the activities of enterprises participating in multilevel sales.

Accordingly, organizations registering for multi-level sale activities must satisfy the following seven conditions:

(1) Being an enterprise established in Viet Nam in accordance with the law and having never had its certificate of registration of multi-level sale activities revoked;

(2)  Having a charter capital of VND 10 billion or more (while currently staying at only VND 5 billion);

(3) The partner/member/owner/founding shareholder (depending on the type of enterprise) and the legal representative of the enterprise, excluding any organization or individual ever holding one of the said positions at the multi-level selling enterprise, has had its multi-level sales registration certificates revoked in accordance with the law;

(4)  Having to deposit at a commercial bank or branch of a foreign bank in Viet Nam;

(5) Making available the standard contract for participation in multi-level sales, operation rules, bonus pay plans and training programs that are clear, transparent and in accordance with Decree 40.  

(6) Having an information technology system which manages the network of multi-level sellers and a website to provide information on enterprises and corporate multi-level sale activities;

(7) Having a communication system to receive, solve questions and complaints by multi-level sellers.  

Decree 40 also supplements the regulations on the operation of multi-level selling enterprises in localities.

However, in order to facilitate the operation of genuine multi-level selling enterprises, Decree 40 also provides for the simplification of some administrative procedures, such as reducing the amendment and supplement of the certificate; making a notification in case of any change to the list of multi-level marketing goods, etc. In addition, in order to enhance the responsibility of multi-level sellers, the Decree stipulates that multi-level sellers must make written commitments upon participating in multi-level sales.

Decree 40 took effect as from May 2, 2018./.

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