Client update: New legislation on multi-level marketing

On May 14, 2014, the Government issued Decree No. 42/2014/ND-CP on management of multi-level marketing operation, which specifies what kind of goods may be traded by multi-level marketing.

The goods are not permitted doing business by multi-level marketing include: goods on the list of banned/ restricted goods and goods are being applied emergency measures to take back, prohibit or cease temporarily putting on the market under the laws. Goods are medicine; medical equipment; veterinary medicine (including veterinary medicine and aquaculture), plant protection products; chemicals, insecticides, etc are not permitted to do multi-level marketing.

Business must have legal capital of VND 10 billion

Decree 42/2014/ND-CP stipulated an additional condition for multi-level marketing that business must have legal capital of VND 10 billion. The deposit is also raised up to 5 billion instead of 1 billion under the previous regulations. The governing body to authorize registration of multi-level marketing activities assigned to the Ministry of Industry and Trade instead of the provincial Departments as previously provided. The Decree also supplement the validity of certificate of multi-level marketing is 5 years and able to renewal further, 5 years per each time.

Certificate would be revoked if stopping temporarily business exceed 12 months

Business would be revoked certificate of multi-level marketing in the following conditions: its business license, investment license being revoked or expired; the application for registration of certificate of multi-level marketing activity has false information; being sanctioned for the acts of infringement; no doing business multi-level marketing activities for 12 consecutive months from the date of issuance of the certificate of multi-level marketing; stopping temporarily business exceed 12 months etc.

The Decree become effective from July 1, 2014 replacing Decree No. 110/2005/ND-CP dated August 24, 2005.

If you are interested in the Decree, please feel free to contact us via email: hanoi@pham.com.vn

Pham & Associates