What are requirements for participating in multi-level marketing (MLM) in Vietnam?

What are requirements for participating in MLM in Vietnam?

Pursuant to Article 28 of the Decree 40/2018/NĐ-CP stipulating requirements for participating in MLM in Vietnam 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.

Above regulations are requirements for participating in MLM in Vietnam.

Is it necessary for MLM participants to sign contract with MLM companies in Vietnam?

Pursuant to Article 29 of the same Decree stipulating MLM contract in Vietnam as follows:

1. The MLM company must enter into MLM contract with every participant.

2. A MLM contract must include the following contents:

a) Name, legal representative and contract information of the MLM company;

b) Full name, date of birth, permanent residence (or registered residence of a foreigner), current residence (either permanent or temporary), telephone number, bank account number, number of ID card/ citizen’s identity card/ passport of the participant; number of work permit if the participant is a foreigner;

c) Full name and identity number of the introducer (or sponsor);

d) Information concerning the products sold through the MLM;

dd) Information concerning the compensation plan and business rule;

e) Rights and obligations of the parties, which must conform to regulations herein and relevant laws;

g) The provision on payment of commissions and bonuses by bank transfer;

h) The provision on repurchase of products;

i) Cases where a MLM contract is terminated and obligations arising from such termination;

k) The policy for settlement of contract disputes.

3. A MLM contract must meet the following format requirements:

a) The MLM contract must be made in Vietnamese with a font of at least 12-point size;

b) The text of the MLM contract must have sufficient color contrast against the background.

As regulations above, MLM participants shall sign a contract with MLM companies.

Best regards!