What is additional 01 responsibility of participants in multi-level marketing network from June 20, 2023 in Vietnam?

What is additional 01 responsibility of participants in multi-level marketing network from June 20, 2023 in Vietnam?

In Article 41 of Decree 40/2018/ND-CP, responsibility of a participant in the MLM network is as follows:

1. Carry out marketing, sale and recruitment of downline distributors only after having granted a membership card.

2. Present the membership card before introducing or selling products.

3. Comply with terms and conditions of the signed MLM contract and the MLM company’s business rule.

4. Provide sufficient and accurate information concerning the MLM company, products sold through the MLM, the compensation plan and business rule of the MLM company.

In Clause 31, Article 1 of Decree 18/2023/ND-CP, Clause 5 has been added to Article 41 of Decree 40/2018/ND-CP as follows:

31. Clause 5 below is added to Article 41:

 “5. Do not provide information about food 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; Do not provide information about food that represents or quotes patients' opinions that the food has medicinal use."

Thus, from June 20, 2023, participants in multi-level marketing network have 01 new responsibility in Vietnam as:

- Do not provide information about food 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;

- Do not provide information about food that represents or quotes patients' opinions that the food has medicinal use.

What are eligibility requirements to be satisfied by a participant in multi-level marketing network in Vietnam?

In Article 28 of Decree 40/2018/ND-CP, eligibility requirements to be satisfied by a participant in multi-level marketing network are as follows:

1. A person wishing to participate in the MLM network must have full legal capacity as prescribed by law.

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) A foreigner who fails to possess a valid work permit granted by a competent authority of Vietnam, except for cases of work permit exemption as regulated by the labour 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;

In Clause 22, Clause 23, Article 1 of Decree 18/2023/ND-CP, conditions for participants in multi-level marketing network are as follows:

22. Amendments to Clause 1 of Article 28:

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

23. Amendments to Point b Clause 2 of Article 28:

"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;

Thus, participants in multi-level selling must meet the following conditions:

- Having full civil act capacity as prescribed by law and residing in Vietnam;

- Not being allowed to participate in multi-level selling such as:

a) Currently serving a prison sentence or having a criminal record for manufacturing, trading in counterfeit goods, manufacturing or trading in banned goods, false advertising, deceiving customers, fraudulently appropriating property, abusing credit responsibility for appropriating property, illegally appropriating property, crime of violating regulations on business by multi-level method;

+ Foreigners who do 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 a partnership company;

Owner of a sole proprietorship or a single-member limited liability company;

Members, for limited liability companies with two or more 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.

What are prohibited acts in multi-level marketing of participants in Vietnam?

In Clause 2, Article 5 of Decree No. 40/2018/ND-CP, prohibited acts in multi-level marketing of participants are as follows:

2. A MLM participant is prohibited from:

a) committing the prohibited act specified in Point a Clause 1 of this Article;

b) providing false or misleading information about benefits of a participant, features or uses of products, or operations of the MLM company;

c) failing to obtain a written authorization from the MLM company before organizing MLM conferences, meetings or training courses;

d) luring, enticing or bribing participants of another MLM company to participate in the network of the MLM company in which he/she participates;

dd) taking advantage of his/her position, power or social position to encourage, request, lure or entice other persons to participate in MLM network or buy products through the MLM model;

e) performing MLM activities in a province in which the MLM company does not yet carry out registration of MLM activities.

Thus, prohibited acts for multi-level marketing participants in Vietnam include:

- Requiring others to make a deposit or pay a certain amount of money to sign a contract to participate in multi-level selling;

- Providing false or misleading information about the benefits of participating in multi-level selling, the features and uses of goods, and the operation of the multi-level selling enterprise;

- Organizing seminars, conferences, and training on business by multi-level method without being authorized in writing by the multi-level selling enterprise;

- To entice, seduce and bribe other enterprises' multi-level marketing participants to join the network of the enterprise in which they are participating;

- Taking advantage of positions, powers, social and professional status to encourage, request, entice or seduce others to participate in the multi-level marketing network or purchase goods for business by the multi-level method. ;

- Carry out multi-level selling activities in the locality where the enterprise has not been granted a certificate of registration of multi-level marketing activities in the locality.

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

Best Regards!