Tightening regulations on MLM (multi-level marketing) Overseas / Vietnam

Tightening regulations on MLM (multi-level marketing) Overseas / Vietnam

In March 2018, the Vietnamese government issued Decree 40/2018 / ND-CP, which replaces Decree 42/2014 / ND-CP, regarding Multi-Level Marketing (MLM). Decree 40 is already valid and companies must meet all the conditions under ND Decree 40.

MLM registration application documents

With the registration certificate application, the MLM company must submit the following documents:

• Copy of company registration certificate
• Personal identification documents for partners/founding shareholders/owners
• Details of target products
• IT infrastructure for managing participant networks
• A document certifying that the MLM company has a website
• Details of information and communication system for complaint processing
• Materials related to the award plan
• Documents about business details
• Training program materials
• Contract document

MLM registration conditions

The MLM registration certificate is valid for 5 years from the date of issue and can be extended. MLM companies must meet certain conditions before registering in Vietnam.

• Company established in Vietnam
• Registered capital is over $430,000
• Contracts, operating rules, rewards, and training content in line with Cabinet Order 40
• Information communication system for complaint handling

MLM restriction activities

Under Decree No. 40, some activities are prohibited or restricted to ensure a transparent and fair environment for companies and participants.

Merchandise prohibited by MLM

Pharmaceuticals, medical devices, digital content products, and chemical products are prohibited from handling at MLM.

MLM product quality

Businesses and participants should ensure that the products sold are not counterfeit or non-standard quality.

Sale of MLM network

MLM companies cannot sell or transfer their network of participants to other companies.

Information about MLM benefits

Company and participants are required not to provide false or misleading information about the awards, benefits, fees and features offered by the company.

Hold MLM seminars and training

Companies may not hold seminars or training sessions for existing or new participants without the permission of the government authorities.

Obligations of MLM companies

MLM Companies shall not impose any obligations on Participants. You also cannot demand that you waive your rights within the network.

Half-year reporting obligations of MLM companies

Under Decree No. 40, MLM companies are required to submit a report every six months to the Ministry of Industry and Trade and the State/Municipal Bureau of Industry and Trade.

MLM companies need to provide information about networks, revenue, business activities, compensation, taxes, promotion plans, seminars and training sessions.

MLM penalties

Over the past few years, the Vietnamese government has fined numerous MLM companies in Vietnam and has expired their licenses due to fraud and tax law violations. Decree No. 40 is expected to help minimize fraud, protect the rights of participants and strengthen government oversight.

How to establish an MLM company in Vietnam

So far, I've covered how to set up a company in Vietnam.

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