Multi-level marketing: management server must be located in Vietnam

This is one of the new contents that the Government has just issued in Decree 40 on the management of multi-level marketing business activities, effective from May 2, 2018, replacing Decree 42 issued four years ago.

Accordingly, to register for multi-level sales activities, businesses must have a deposit of 10 billion VND (previously only 5 billion VND was required).

Enterprises must have an information technology system to manage the network of multi-level marketing participants, and an electronic information page to provide information about the enterprise and its multi-level marketing activities. This information technology system must be operated on a server located in Vietnam.

In particular, enterprises participating in multi-level sales must provide access to the management account of the multi-level sales management system upon written request of the competent state management agency on multi-level sales management.

Unlike the previous Decree 42, the newly issued decree provides regulations in the direction that enterprises are responsible for complying with regulations on business conditions and conditions for circulation of goods.

Specifically, to protect participants from illegal multi-level marketing activities, the new decree restricts businesses from allowing participants to consign goods. It forces parties to deliver goods after payment.

Enterprises participating in multi-level marketing must issue invoices for each sales transaction to each multi-level marketing participant of the enterprise and to customers who purchase goods directly from the enterprise.

For multi-level marketing businesses in localities, the decree requires participating businesses to submit registration documents and must receive confirmation from the local Department of Industry and Trade to register their operations in the locality.

Local management agencies have the right to revoke the registration of operations if the enterprise violates the law on management of multi-level sales activities as prescribed.

In case of organizing conferences, seminars, or training courses on multi-level sales with the participation of 30 or more people or with the participation of 10 or more multi-level sales participants, multi-level sales enterprises are responsible for notifying the Department of Industry and Trade of the province or centrally-run city before implementation.