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THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIETNAM Independence
- Freedom - Happiness
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No. 110/2005/ND-CP
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Hanoi, August 24th,
2005
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DECREE
ON MANAGEMENT OF MULTI-LEVEL SALE OF GOODS
THE GOVERNMENT
Pursuant to the December 25, 2001
Law on Organization of the Government;
Pursuant to the December 3, 2004 Competition Law;
At the proposal of the Trade Minister,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1:
Governing scope
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Article 2:
Subjects of application
This Decree shall apply to
enterprises engaged in multi-level sale of goods and participants in the
multi-level sale of network.
Article 3:
Multi-level sale of goods
1. Multi-level sale of goods
means an approach of marketing to retail goods which meets the conditions
specified in Clause 11, Article 3 of the Competition Law.
2. Enterprises shall be allowed
to organize multi-level sale of goods only after being granted multi-level sale
registration papers according to the provisions of Article 16 of this Decree.
Article 4:
Participants in multi-level sale of goods
1. Participants in multi-level
sale of goods (hereinafter referred collectively to as participants) are
individuals who have full civil act capacity and have entered into contracts
for participation in multi-level sale of goods with multi-level sale
enterprises, except for individuals defined in Clause 2 of this Article.
2. The following individuals
must not participate in multi-level sale of goods:
a. Those who are serving
imprisonment sentences or former convicts for crimes of manufacturing and
trading in fake goods, making false advertisements, illegally conducting business,
evading taxes, deceiving customers, appropriating property through swindling,
abusing trust in order to appropriate property, illegally holding property;
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Article 5:
Goods traded by mode of multi-level sale
1. All goods may be traded by
mode of multi-level sale, except for the following case:
a. Goods on the list of goods
banned from circulation or the list of goods subject to restricted business, fake
goods and illegally imported goods according to provisions of law;
b. Goods being preventive and
curative medicines for human use; vaccines and immuno-biologicals; medical
equipment and instruments; assorted veterinary drugs (including veterinary
drugs for aquatic animals), plant protection drugs; insecticidal and germicidal
chemicals and preparations for domestic and medical use; raw materials for
manufacture of curative medicines; toxic chemicals and products containing
toxic chemicals and products containing toxic chemicals specified by law.
2. Goods traded by mode of
multi-level sale must satisfy the following conditions:
a. Being up to the food quality,
safety and hygiene standards provided for by law;
b. Having clear and lawful
origins, properties and utilities;
c. Having labels according to
provisions of law.
Chapter II
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Article 6:
Responsibilities of multi-level sale enterprises
1. Multi-level sale enterprises shall
have to formulate and publicly announce the rules of activities of enterprises
and participants in multi-level sale activities;
2. Multi-level sale enterprises
shall have to supply the persons who wish to join their multi-level sale
networks with documents regarding the following contents:
a. Sale programs, covering modes
of bonus payment; model contracts which enterprises would enter into with
participants and all other agreements on the rights and obligations of
participants; information on quality standards or quality certificates (if
any), prices, utilities and use instructions for goods sold; regulations on
warranty, return or buy-back of goods sold.
b. Programs on training of
participants, covering training contents; training duration; order and procedures
for granting training certificates; duration and contents of periodical
training courses for participants;
c. Operation rules containing
guidance on transaction modes and regulations concerning multi-level sale;
d. Responsibilities of
participants;
e. Economic benefits which
participants may enjoy through activities of marketing or directly selling
goods, as well as conditions for obtaining such economic benefits;
f. Conditions for termination of
contracts by participants as well as rights and obligations arising from such
contract termination;
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3. Apart from the
responsibilities defined in Clause 2 of this Article, multi-level sale
enterprises shall also have the following responsibilities:
a. To ensure truthfulness and
accuracy of information supplied to participants;
b. To ensure quality of goods
sold by mode of multi-level sale;
c. To settle complaints of
participants and consumers;
d. To withhold and remit
personal income tax amounts of participants into the state budget before paying
commissions, bonuses or other economic benefits to participants;
e. To provide professional
training in multi-level sale and law on multi-level sale to participants;
f. To manage participants
through the system of multi-level sale network member cards made according to a
form set by the Trade Ministry;
g. To notify participants of
goods not to be bought back by enterprises before they buy such goods.
Article 7:
Prohibited acts of multi-level sale enterprises
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1. Requesting want-to-be
participants to make deposits in order to be entitled to participate in their
respective multi-level sale networks.
2. Requesting want-to-be
participants to buy an initial quantity of goods in order to be entitled to
participate in their multi-level sale networks.
3. Requesting want-to-be
participants to pay money or any charges for study courses, training courses,
seminars, social activities or other similar activities in order to be entitled
to participate in their respective multi-level sale networks, except for
expenses for purchase of documents specified in Clause 2, Article 6 of this
Decree.
4. Failing to commit to permit
participants to return goods and receive back money amounts already remitted to
enterprises according to the provisions of Article 11 of this Decree.
5. Obstructing participants in
returning goods as a result of termination of contracts on participation in
multi-level sale.
6. Permitting participants to
receive commissions, bonuses or other economic into participating in
multi-level sale.
7. Refusing to pay, without
plausible reasons, commissions, bonuses or other economic benefits enjoyable by
participants.
8. Supplying deceitful information
on benefits from participation in the multi-level sale networks in order to
entice other persons to participate in multi-level sale.
9. Supplying untruthful
information on characteristics and utilities of goods in order to lure other persons
into participating in multi-level sale.
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1. When participating in
multi-level sale activities, the participants shall have the following
responsibilities:
a. To produce their multi-level
sale network member cards before introducing goods or marketing for sale of
goods;
b. To notify all contents
specified in Clause 2, Article 6 of this Decree to other persons under their
sponsorship for participation in multi-level sale networks;
c. To supply truthful and
accurate information on type, quality, prices, and usage of goods for sale;
d. To comply with regulations in
operation rules and sale programs of enterprises.
2. Participants are forbidden to
take the following acts:
a. Requesting persons under
their sponsorship for participation in multi-level sale networks to pay any
charges for study course, training courses, seminars, social activities or
other similar activities;
b. Supplying deceitful
information on benefits from the participation in multi-level sale, untruthful
information on characteristics and utilities of goods, activities of
multi-level sale enterprises in order to entice other persons to participate in
multi-level sale.
Article 9:
Contracts on participation in multi-level sale
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2. The Trade Ministry shall have
to guide the basic contents of model contract for multi-level sale activities.
Article 10:
Termination of contracts on participation in multi-level sale
1. Participants have the right
to terminate participation contracts by sending written notices to multi-level
sale enterprises at least 7 working days before terminating the contracts.
2. Multi-level sale enterprises
have the right to terminate contracts with participants when the latter violate
the provisions of Article 8 of this Decree and shall have to notify such in
writing to the participants at least 7 working days before terminating
contracts.
3. Within 15 working days after
the termination of contracts, multi-level sale enterprises shall have the
following responsibilities:
a. To buy back goods already
sold to the participants according to the provisions of Article 11 of this Decree;
b. To pay the participants
commissions, bonuses and economic benefits enjoyable by participants in the
course of participating in the multi-level sale networks.
Article 11:
Buying back goods from participants upon termination of multi-level sale participation
contracts
1. Multi-level sale enterprises
must buy back goods already sold to participants when such goods satisfy the
following conditions:
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b. They are returned within 30
days after the participants receive them.
2. In cases where they must buy
back goods under the provisions of Clause 1 of this Article, multi-level sale
enterprises shall have to:
a. Refund the total money amount
already paid by participants to receive such goods, if there is no ground for
deduction under the provisions of Point b of this Clause;
b. In cases where enterprises
must bear management and re-warehousing expenses as well as other
administrative expenses, they shall have to refund a total sum which is nor
smaller than 90% of the amount already paid by participants to receive such
goods.
3. When refunding money
according to the provisions of Clause 2 of this Article, multi-level sale
enterprises may deduct commissions, bonuses and/or other economic benefits
which have been enjoyed by participants form the receipt of such goods.
4. The provisions of Clauses 1
and 2 of this Article shall not apply to goods which are not subject to
buy-back, including goods which are expired upon return, seasonal goods or
goods for sale promotion.
Article 12:
Responsibilities binding between multi-level sale enterprises and participants
1. Multi-level sale enterprises
shall have to pay damages to consumers or participants in the following cases:
a. Participants cause damage to consumers
or other participants while strictly observing operation rules and sale
programs of enterprises;
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2. Multi-level sale enterprises
shall have to regularly supervise activities of participants in order to ensure
that the latter strictly observe their operation rules and sale programs.
3. In cases where they fail to
comply with the provisions of Article 8 of this Decree, thus causing damage to
consumers or other participants, multi-level sale participants shall have to
pay level sale participants shall have to pay compensations for such damage.
Article 13:
Information on benefits from participation in multi-level sale
In cases where an individual
participates in a multi-level sale network to introduce sale activities, the
multi-level sale enterprise or the participant must clearly state his/her name,
age, address, participation duration and profit earned in each period,
certified by tax payment receipts issued by the tax office which collects tax
from such individual.
Chapter
III
MANAGEMENT OF
MULTI-LEVEL SALE ACTIVITIES
Article 14:
Conditions for granting multi-level sale registration papers
Enterprises shall be granted
multi-level sale registration papers when fully satisfying the following
conditions:
1. Having paid deposits
according to the provisions of Article 17 of this Decree.
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3. Satisfying all business
conditions or being granted certificates of satisfaction of business conditions
as provided for by law in cases where they trade in goods on the list of goods
subject to conditional business.
4. Having transparent sale
programs which are not contrary to law.
5. Having clear programs on
training of participants.
Article 15:
Dossiers of request for multi-level sale registration papers
Dossiers of request for
multi-level sale registration papers shall be filed with provincial-level Trade
Service or Trade-Tourism Services where enterprises have made their business
registrations. Such a dossier comprises:
1. A written request for
multi-level sale registration paper, made according to a form set by the Trade
Ministry.
2. Notarized copies of the
business registration certificate.
3. A banks written certification
of the deposit amount according to the provisions of Clause 1, Article 17 of
this Decree.
4. Notarized copies of the
certificate of satisfaction of business conditions in cases where the
enterprise trades in goods on the list of goods subject to conditional
business.
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6. The sale program which has
the contents specified at Point a, Clause 2, Article 6 of this Decree.
7. The program on training of
participants, with the contents specified at Point b, Clause 2, Article 6 of
this Decree.
Article 16:
Procedures for granting and supplementing multi-level sale registration papers
1. Within 15 working days after receiving
complete and valid dossiers, provincial-level Trade Services or Trade-Tourism
Services where enterprises have made their business registrations shall have to
such enterprises, provided that their dossiers fully satisfy the conditions
specified in Article 14 of this Decree.
In case of refusal to grant the
multi-level sale registration papers, provincial-level Trade Services or
Trade-Tourism Services must issue written replies clearly stating the reasons
therefor.
2. Enterprises requesting the grant
of multi-level sale registration papers must pay grant fees. The fee levels and
the regime of fee management and use shall be specified by the Finance
Ministry.
3. In case of any changes
relating to contents of their sale programs, enterprises shall have to carry
out procedures for requesting shall have to of multi-level sale registration
papers shall comply with the provisions of Clauses 1 and 2 of this Article.
The order and time limit for
additional grant of multi-level sale registration papers shall comply with the
provisions of Clauses 1 and 2 of this Article.
4. Within 15 working days after
the grant or additional grant of multi-level sale registration papers,
provincial-level Trade Services or Trade-Tourism Services shall have to report
such in writing to the competition-managing office of the Trade Ministry.
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6. The Trade Ministry shall set
the forms of multi-level sale registration papers and multi-level sale
organization notices.
Article 17:
Deposits
1. A multi-level sale enterprise
must pay a deposit which is equal to 5% of its charter capital and must not be
lower than VND one billion at a commercial bank operating in Vietnam.
2. Upon receiving notices on
cessation of multi-level sale activities, multi-level sale enterprises may use
deposits to pay commissions, bonuses or sums for buying back goods from
participants.
3. Upon termination of
multi-level sale activities, multi-level sale enterprises may withdraw the
whole deposit amount only in cases where there is no complaint or lawsuit
initiated by multi-level sale participants concerning the payment of
commissions, bonuses or sums for buying back goods.
Article 18:
Withdrawal of multi-level sale registration papers
1. Provincial-level Trade
Services or Trade-Tourism Services shall withdraw multi-level sale registration
papers in the following cases:
a. Enterprises have their
business registration certificates withdrawn;
b. Enterprises have their
certificates of satisfaction of business conditions withdraw in cases where they
trade in goods on the list of goods subject to conditional business;
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d. Enterprises commit serious
law-breaking acts in multi-level sale activities.
2. In cases where multi-level
sale enterprises have their multi-level sale registration papers withdrawn
under the provisions of Clause 1 of this Article, they shall have to
immediately stop the multi-level sale and the recruitment of new participants,
and fulfill their responsibilities toward participants according to the
provisions of Article 11 of this Decree, or compensate consumers or
participants for cases or matters arising from previous transactions before the
withdrawal of multi-level sale registration papers.
3. Decisions on withdrawal of
multi-level sale registration papers shall be sent by provincial-level Trade
Services or Trade-Tourism Services to the competition-managing office of the
Trade Ministry and publicized on the mass media.
Article 19:
Suspension or termination of multi-level sale activities
1. When wishing to suspend or
terminate multi-level sale activities, multi-level sale enterprises shall have
the following obligations:
a. To abide by registrations on
suspension or termination of business activities according to the provisions of
law on enterprises;
b. To notify such to
provincial-level Trade Services or Trade-Tourism Services where they have made
their business registrations; and at the same time, to post up the suspension
or termination at their headquarters and notify participants thereof within 30
working days before the suspension or termination of activities.
2. In case of suspension or
termination of multi-level sale activities, multi-level sale activities,
multi-level sale enterprises shall have to liquidate multi-level sale
participation contracts with participants according to the provisions of
Article 10 of this Decree within 30 working days after multi-level sale
activities are suspended or terminated.
Article 20:
Period reports of multi-level sale enterprises
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Article 21:
Responsibilities of the Trade Ministry
1. The Trade Ministry shall be
answerable to the Government for performing the function of state management
over multi-level sale activities throughout the country.
2. The competition-managing
office of the Trade Ministry shall have to assist the Trade Minister in the
following specific management contents:
a. Guiding provincial-level
Trade Services or Trade-Tourism Services in granting multi-level sale
registration papers; inspecting the management of multi-level sale activities
by provincial-level Trade Services or Trade-Tourism Services;
b. Directly inspecting or
examining multi-level sale activities when deeming it necessary; handling
according to its competence acts of violating the provisions of law on
multi-level sale activities;
c. Proposing the Government to
promulgate or amend legal documents on assurance of order on organizing
multi-level sale activities, protection of benefits of participants in the
multi-level sale networks, consumers, and maintenance of socio-economic
stability.
Article 22:
Responsibilities of provincial/municipal Peoples Committees
1. Provincial/municipal Peoples
Committees shall have to perform the state management over the mode of
multi-level sale according to their respective competence and the Trade
Ministrys directions and instructions under the provisions of this Decree and
other relevant provisions of this Decree and other relevant provisions of law.
2. Provincial-level Trade
Services or Trade-Tourism Services shall assist provincial/municipal Peoples
Committees in granting multi-level sale registration papers; regularly inspect
and supervise multi-level sale activities in their localities and periodically
report to the competition managing office of the Trade Ministry on such
inspection or supervision.
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1. Multi-level sale enterprises
or participants that commit the following acts of violation shall, depending on
the nature and seriousness of their violations, be administratively sanctioned
according to the provisions of law on handling of administrative violations:
a. Organizing multi-level sale
while the specified conditions therefore are not fully satisfied;
b. Violating the regulations on
subjects eligible for participating in multi-level sale;
c. Violating the regulations on
goods permitted to be traded by mode of multi-level sale;
d. Failing to fully notify the
required information to new sale network participants under their sponsorship;
e. Taking acts which multi-level
sale enterprises and participants are forbidden to take;
f. Failing to enter into written
contracts with participants;
g. Violating the regulations on
termination of multi-level sale participation contracts;
h. Failing to comply with the
reporting regime provided for in Article 20 of this Decree;
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j. Violating the regulations on
deposits and payments made from deposits in the course of operation;
k. Failing to pay taxes
according to the provisions of law;
l. Failing to abide by the
requests of competent state agencies conducting inspections or examinations;
m. Violating other provisions of
this Decree
2. In cases where violations by
multi-level sale enterprises or participants cause damage to material benefits
of concerned organizations or individuals, they shall have to pay damages
according to the provisions of law.
Article 24:
Competence and procedures for handling and administrative violations
1. Competence for handling acts
of administrative violation specified in Article 23 of this Decree shall comply
with the provisions of the Competition Law and the Ordinance on Handling of
Administrative Violations.
2. Procedures for handling acts
of administrative violation specified in Article 23 of this Decree shall comply
with the provisions of law on handling of administrative violations.
Chapter IV
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Article 25:
Implementation effect
1. This Decree takes effect 15
days after its publication in CONG BAO . Multi-level sale enterprises which
make business registrations before the effective date of this Decree shall have
to carry out procedures of request for multi-level sale registration papers at
provincial-level Trade Services or Trade-Tourism Services where they have made
business registrations within 3 months as from the effective date of this
Decree.
2. Ministers, heads of
ministerial-level agencies, heads of Government-attached agencies and
presidents of Peoples Committees of provinces or centrally-run cities shall
have to implement this Decree.
ON
BEHALF OF THE GOVERNMENT
PRIME MINISTER
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