Procedures for termination of multi-level marketing activities in Vietnam from June 20, 2023

Procedures for termination of multi-level marketing activities in Vietnam from June 20, 2023 (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Procedures for termination of multi-level marketing (MLM) activities in Vietnam

Procedures for terminating multi-level marketing activities applied from June 20, 2023 are specified in Clause 13, Article 1 of Decree 18/2023/ND-CP (amending Article 18 of Decree 40/2018/ ND-CP), specifically as follows:

1.1. In the case that the MLM enterprise conducts self-termination of its MLM activities in Vietnam

- Application for termination of MLM activities includes:

+ Notification for the termination of MLM activities under form No. 06 provided in the Appendix attached to Decree 40/2018/ ND-CP;

+ Report in accordance with form No. 06a provided in the Appendix attached to Decree 18/2023/ND-CP;

+ 01 copy of latest change of enterprise registration certificate or the documents with equivalent legal validity;

+ 01 original MLM registration certificate;

+ 01 copy of decision on termination of MLM activities of the owner for a sole proprietorship or limited liability company with one member; decision and meeting minutes on the termination of MLM activities of the members’ council for a limited liability company with two or more members; decision and meeting minutes of the general shareholders for a joint stock company; partners’ in a partnership.

- Procedures to terminate MLM activities:

+ The enterprise shall submit the Notice of termination of MLM activities to the Ministry of Industry and Trade (in person, online or by post);

+ If the application is not satisfactory according to Point a of this Clause, the Ministry of Finance shall issue a request for supplementation of the application within 10 working days from the day on which the application is received. The time limit for supplementation is 15 working days from the day on which the request is received.

+ In case the enterprise fails to supplement the application within the time limit or the enterprise is still unsatisfactory, the Ministry of Industry and Trade shall issue a written notice of the return of the application and provide explanation.

+ Within 10 working days from the date on which the application to terminate MLM activities is received, the Ministry of Industry and Trade shall issue a document confirming the receipt of the application, notify provincial Departments of Industry and Trade nationwide by one of the methods provided in clause 5 Article 10 of Decree 40/2018/ ND-CP and publish information on the Ministry of Industry and Trade’s web portal;

1.2. In case of termination of MLM activities due to expiration or revocation of the MLM registration certificate in Vietnam

- Application for termination of MLM activities includes:

+ Notification for the termination of MLM activities under form No. 06 provided in the Appendix attached to Decree 40/2018/ ND-CP;

+ Report in accordance with form No. 06a provided in the Appendix attached to Decree 18/2023/ND-CP;

+ 01 copy of latest change of enterprise registration certificate or the documents with equivalent legal validity;

+ 01 original MLM registration certificate.

- Procedures to terminate MLM activities:

+ Within 30 working days from the date on which the MLM registration certificate expires or is revoked, the enterprise shall submit the Notice of termination of MLM activities to the Ministry of Industry and Trade (in person, online or by post);

+ If the application is not satisfactory according to Point a of this Clause, the Ministry of Finance shall issue a request for supplementation of the application within 10 working days from the day on which the application is received. The time limit for supplementation is 15 working days from the day on which the request is received.

+ In case the enterprise fails to supplement the application within the time limit or the enterprise is still unsatisfactory, the Ministry of Industry and Trade shall issue a written notice of the return of the application and provide explanation.

+ Within 10 working days from the date on which the application to terminate MLM activities is received, the Ministry of Industry and Trade shall issue a document confirming the receipt of the application, notify provincial Departments of Industry and Trade nationwide by one of the methods provided in clause 5 Article 10 of Decree 40/2018/ ND-CP and publish information on the Ministry of Industry and Trade’s web portal.

2. Eligibility requirements for MLM registration in Vietnam

An applicant for MLM registration is required to fulfill all of the following requirements:

- It must be an enterprise that is duly established under the laws of Vietnam in the territory of Vietnam and has never had a MLM registration certificate revoked;

- It must have at least VND 10 billion of charter capital;

- Partners of partnerships, owners of sole proprietorships or single-member limited liability companies, members of multiple-member limited liability companies, shareholders of joint stock companies, and legal representatives of companies must not include organizations or individuals who have held the same positions above of any MLM enterprises whose MLM registration certificate has been withdrawn according to Decree 42/2014/ND-CP and v while such enterprises are performing MLM activities

- It must deposit money at a commercial bank or a branch of foreign bank locating in Vietnam as regulated in Clause 2 Article 50 of Decree 40/2018/ND-CP;

- Its MLM contract forms, business rule, compensation plan and training programs must be available, obvious, transparent and conformable with regulations in Decree 40/2018/ND-CP;

- It must develop an information technology system to manage participants in the MLM and a website to provide information about its profiles and MLM activities;

- It must develop a communications system to receive and take actions against complaints or queries of MLM participants.

- In case the registering organization is an enterprise whose owners or members or shareholders are foreign investors or foreign-invested business organizations, all of these foreign investors or foreign-invested business organizations need to have at least 03 years of continuous operation of MLM business in a certain country or territory.

(Clause 1, Article 7 of Decree 40/2018/ND-CP (amended by Decree 18/2023/ND-CP))

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