On April 28, 2023, the Government issued the Decree 18/2023/ND-CP (“Decree 18”), amending and supplementing the Decree 40/2018/ND-CP on managing multi-level marketing businesses. Accordingly, ATA Legal Services would like to summarise the outstanding modifications as follows:
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Criteria |
Provision |
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The definition of the multi-level marketing (“MLM”) business |
The Decree 40/2018/ND-CP stipulates a MLM business refers to the business that uses the multi-level marketing for the sale of its products. However, the Decree 18 supplements the specifical definition of the multi-level marketing business. Accordingly, MLM business means an enterprise which has been granted a certificate of MLM registration by a competent authority in order to run a MLM business in accordance with this Decree. |
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Amending the eligibility requirements for the enterprises, individuals to contribute capital/ purchase shares in the MLM businesses while such businesses are carrying out the MLM activities. |
- Requirements for the enterprises’ members: are applicable to all shareholders and members of enterprises, not only for the founding shareholders of JSCs or the general partners of partnerships as before. - Requirements for the enterprises are foreign investors: at least 03 years of continuous operation of MLM business in a certain country or territory. |
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Supplementing the conditions of the enterprise’s business contact |
The Decree 18 specifically stipulates on conditions of the enterprise’s business contact who has successfully completed the training program and obtained the certificate of knowledge of law on MLM to persons who passed the certification examination. |
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Supplementing the requirements and responsibilities of MLM participants |
The Decree 18 supplements the requirements of MLM participants are individuals who reside in Vietnam by the Law on Residence and comply with regulations on advertising of food, functional foods, do not provide information about food with the following contents and forms: -Using images, equipment, costumes, names, correspondences of health facilities, health units, physicians, pharmacists, health workers, testimonials of patients, articles written by physicians, pharmacists, health workers; -Representing or quoting patients’ opinions that the food has medicinal use. |
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Supplementing the responsibilities of the MLM businesses |
The Decree 18 supplemented provisions on responsibilities of the MLM business as follow: -Satifying the condition that at least 20% of the revenue from MLM in a fiscal year is from clients who are not the enterprise’s MLM participants. -Complying with regulations on food advertising similar to the responsibilities of MLM participants. |
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The specificial definition of the payment obligations of the MLM business secured by the deposit |
The Decree 18 specificially defines the MLM business to its MLM participants are obligations the arise during the lawful processes of MLM activities, including the obligation to pay compensation under the compensation plan, the obligation to repurchase the products returned by the MLM participants. |
Furthermore, the Decree 18 emphasizes that the MLM enterprises that have been granted the confirmation of registration of MLM activities in their provinces shall have the responsibility to fulfill the conditions for MLM activities locally in accordance with this Decree.
The Decree 18/2023/ND-CP takes effect from June 20, 2023.
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