New regulations on managing multi-level marketing activities.

Decree No. 42/2014/ND-CP on the management of multi-level marketing activities, recently issued by the Government, includes many new regulations aimed at improving the effectiveness of management and supervision by state management agencies over the activities of multi-level marketing businesses, while also protecting participants from fraudulent and exploitative practices. This Decree will take effect from July 1, 2014, replacing Decree 110/2005/ND-CP.

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Goods that are not allowed to be sold through multi-level marketing include: goods on the list of prohibited goods, goods on the list of restricted goods, and goods that are subject to emergency measures requiring recall, prohibition of circulation, or temporary suspension of circulation according to the law.

Goods such as medicines; medical equipment; veterinary medicines (including aquatic veterinary medicines), pesticides; chemicals, insecticides, disinfectants used in the household and medical fields; hazardous chemicals and products containing hazardous chemicals as prescribed by law are also prohibited from being sold through multi-level marketing.

Furthermore, all types of services or other business activities that are not related to the buying and selling of goods are prohibited from conducting business through multi-level marketing, except where permitted by law.

Prohibition of pyramid scheme business practices.

The decree also stipulates prohibited behaviors in multi-level marketing activities. Specifically, multi-level marketing businesses are not allowed to require prospective participants to deposit or pay a certain amount of money in any form to gain the right to join the multi-level marketing network; they are not allowed to require prospective participants to purchase a certain quantity of goods in any form to gain the right to join the multi-level marketing network; and they are not allowed to conduct business using a pyramid scheme...

Furthermore, participants in multi-level marketing schemes are prohibited from providing false or misleading information about the benefits of participating in multi-level marketing, the nature and uses of goods, or the operations of the multi-level marketing company in order to entice others to join.

Businesses must have a registered capital of 10 billion VND.

The decree clearly states that multi-level marketing activities must be registered in accordance with regulations. Organizations registering to operate multi-level marketing activities must be businesses established in Vietnam in accordance with the law, and have a business registration for retail sales using the multi-level marketing method...

Decree 42/2014/ND-CP supplements the regulations requiring multi-level marketing businesses to have a registered capital of 10 billion VND. The deposit amount has also been raised to 5 billion VND, compared to the previous maximum of 1 billion VND. Specifically, the Decree requires businesses to deposit an amount equivalent to 5% of their charter capital, but not less than 5 billion VND, at a commercial bank where the business is headquartered...

The authority to issue Certificates of Registration for Multi-Level Marketing Activities has been assigned to the Ministry of Industry and Trade instead of the provincial departments as previously stipulated. At the same time, the Decree also adds regulations on the validity period of the certificate of registration for multi-level marketing activities; accordingly, the initial certificate is valid for 5 years, after which the enterprise can renew it multiple times, each time for 5 years.

Suspension of operations exceeding 12 months will result in the revocation of the certificate.

Furthermore, the Decree also stipulates that a business's Certificate of Registration for Multi-Level Marketing Activities will be revoked when its Business Registration Certificate or Investment Certificate is revoked or expires; the application for the Certificate of Registration for Multi-Level Marketing Activities contains fraudulent information; the business is penalized for certain violations; the business fails to conduct multi-level marketing activities for 12 consecutive months from the date of issuance of the Certificate of Registration for Multi-Level Marketing Activities; or the business temporarily suspends multi-level marketing activities for more than 12 consecutive months...

The decree states that the Ministry of Industry and Trade is responsible to the Government for performing the function of state management over multi-level marketing activities nationwide.

According to chinhphu.vn