Official: Multi-level marketing participants must meet eligibility requirements for residence in Vietnam from June 20, 2023?

Official: Multi-level marketing participants must meet eligibility requirements for residence in Vietnam from June 20, 2023?

In Article 28 of Decree 40/2018/ND-CP as amended by Clause 22 and Clause 23, Article 1 of Decree 18/2023/ND-CP stipulates eligibility requirements to be satisfied by a participant as follows:

1. MLM participants are individuals who have full legal capacity in accordance with regulation of laws and reside in Vietnam.

2. The following persons are not allowed to participate in the MLM network:

a) A person who is serving a prison sentence or has previous convictions for manufacturing and trading of counterfeit or banned products, false advertising, deceiving consumers, obtaining property by fraud, abuse of trust to appropriate property, illegal impoundment of property or any violations against regulations on MLM;

b) Foreigners without work permits in Vietnam granted by competent authorities to work for the enterprise as MLM participants, except for case of exemption in accordance with the provisions of law;

c) A person who has participated in the MLM and is faced with administrative penalties for committing violations against regulations in Clause 2, Clause 3 and Clause 4 Article 5 herein but the sanctioning duration has not ended;

d) The persons prescribed in Point c Clause 1 Article 7 herein;

dd) Officials and public employees as regulated in the law on officials and public employees;

Thus, from June 20, 2023, participants in multi-level marketing in addition to meeting the conditions that individuals have full civil act capacity as prescribed by law but also must reside in Vietnam.

In addition, participants of multi-level marketing must not fall into the following cases of not being allowed to participate in multi-level selling:

- Persons who are serving prison sentences or have previous convictions for the crimes of manufacturing, trading in counterfeit goods, manufacturing or trading in prohibited goods, falsely advertising, deceiving customers, fraudulently appropriating property, abusing trusting in appropriating property, illegally occupying assets, committing violations of regulations on business by multi-level method;

- A foreigner who does not have a work permit in Vietnam issued by a competent authority associated with the enterprise in which he or she participates in multi-level marketings, unless otherwise exempted as prescribed by law.

- Multi-level marketing participants who have been sanctioned for violations of regulations on multi-level marketing but have not expired are considered not yet handled for administrative violations;

- Individuals are:

+ General partners for partnership companies,

+ Owner of a private enterprise or a single-member limited liability company,

+ Member, for a limited liability company with multiple members,

+ Founding shareholders for joint stock companies,

+ The legal representative of the enterprise does not include the organization or individual who used to hold one of the above positions at the multi-level selling enterprise whose certificate of registration of multi-level marketing activities has been revoked.

- Cadres and civil servants in accordance with the law on cadres and civil servants.

Will multi-level marketing enterprises bear cost of training for multi-level marketing participants in Vietnam?

In Article 32 of Decree 40/2018/ND-CP, there are regulations on provision of basic training program for participants as follows:

1. The MLM company is responsible for providing participants in its MLM network with training courses according to the basic training program registered with a competent authority without requiring any training fees.

2. Each participant is obliged to attend and acquire all contents of the basic training program.

3. Only persons who are appointed by the MLM company as trainers may provide basic training programs for participants in the MLM network of such company.

4. A basic training program may be provided in one of the following methods:

a) Direct training;

b) Distance training.

5. The MLM company shall evaluate the completion of the basic training program of a participant and give a written certification of basic training contents and volume completed by such participant.

6. The MLM company shall keep all documents concerning basic training programs provided for participants in its MLM network, including documents proving training duration, method, location (if any) and results.

7. In case there are any changes in the contents prescribed in Clause 2 Article 31 herein, the MLM company shall provide additional training in such contents for participants or publish such changes in its website or at its head office, branches, representative offices and business locations within 30 days from the occurrence of such changes.

Thus, the multi-level selling enterprise will bear the training costs for the multi-level marketing participants and the multi-level marketing participants will not be charged training fees of any kind in Vietnam.

How many days in advance must multi-level marketing participants send written notice when terminating their contracts in Vietnam?

In Clause 1, Article 30 of Decree No. 40/2018/ND-CP, terminating a MLM contract is as follows:

1. A participant is entitled to terminate the MLM contract by sending a written notification to the MLM company at least 10 working days before the estimated date of termination.

2. The MLM company is entitled to terminate the MLM contract signed with a participant who commits any violations against regulations in Article 41 herein.

3. The MLM company must terminate the MLM contract signed with a participant who commits violation against regulation in Clause 2 Article 5 herein.

4. Within 30 days from the date on which the MLM contract is terminated, the MLM company shall make full payments of commissions, bonuses and other economic benefits which the participant is entitled to receive during his/her participation in the company's MLM network.

Thus, when a multi-level marketing participant terminates the contract, he/she must send a written notice to the multi-level marketing enterprise at least 10 working days in advance in Vietnam.

Note: Decree 18/2023/ND-CP takes effect from June 20, 2023.

Best regards!