Circular No. 19/2005/TT-BTM guiding certain contents stipulated in Government Decree No. 110/2005/NĐ-CP dated August 24, 2005 on the management of multi-level marketing activities.

CIRCULAR

Guidelines on certain provisions stipulated in Decree No. 110/2005/NĐ-CP

dated August 24, 2005 of the Government on management of multi-level marketing activities

Pursuant to Decree No. 29/2004/NĐ-CP dated January 16, 2004 of the Government on functions, tasks, powers, and organizational structure of the Ministry of Trade,

Pursuant to Decree No. 110/2005/NĐ-CP dated August 24, 2005 of the Government on management of multi-level marketing activities,

The Ministry of Trade hereby issues guidelines on certain provisions stipulated in Decree No. 110/2005/NĐ-CP as follows:

1. Subjects requesting issuance of Multi-Level Marketing Organization Registration Certificate

The subjects requesting issuance of Multi-Level Marketing Organization Registration Certificate are enterprises established in accordance with Vietnamese laws on enterprises wishing to organize multi-level marketing activities after the effective date of Decree No. 110/2005/NĐ-CP of the Government on management of multi-level marketing activities dated August 24, 2005.

2. Issuing authority for Multi-Level Marketing Organization Registration Certificate

The issuing authority for Multi-Level Marketing Organization Registration Certificate is the Department of Commerce or the Department of Commerce and Tourism where the enterprise requesting issuance of Multi-Level Marketing Organization Registration Certificate has registered its business operations.

3. Responsibilities of the issuing authority for Multi-Level Marketing Organization Registration Certificate

a) Publicly display guidance on conditions, procedures, timeframes, and administrative procedures for issuing Multi-Level Marketing Organization Registration Certificate at their headquarters;

b) Issue Multi-Level Marketing Organization Registration Certificate to enterprises when their application files meet all conditions prescribed in Article 14 of Decree No. 110/2005/NĐ-CP;

c) Ensure the timeframe for reviewing and issuing Multi-Level Marketing Organization Registration Certificate as prescribed in Article 16 of Decree No. 110/2005/NĐ-CP and the guidelines herein;

d) Collect, manage, and utilize registration fees for issuing Multi-Level Marketing Organization Registration Certificate in accordance with the guidance of the Ministry of Finance;

đ) Report in writing to the competition management agency under the Ministry of Trade on new issuance, supplementary issuance, and reissuance of Multi-Level Marketing Organization Registration Certificate as prescribed in Clause 4, Article 16 of Decree No. 110/2005/NĐ-CP;

e) After issuing Multi-Level Marketing Organization Registration Certificate, take the lead in coordinating with other competent state agencies to inspect and supervise the multi-level marketing activities according to the issued Multi-Level Marketing Organization Registration Certificate; identify and take measures within their authority or report to higher authorities for handling violations of laws on management of multi-level marketing activities as prescribed by law;

g) Fully implement record-keeping systems for application files for issuance of Multi-Level Marketing Organization Registration Certificate, supplementary issuance, and reissuance of Multi-Level Marketing Organization Registration Certificate in accordance with legal regulations on record-keeping;

h) Other responsibilities as prescribed by law.

4. Application files for issuance of Multi-Level Marketing Organization Registration Certificate

a) Application files for issuance of Multi-Level Marketing Organization Registration Certificate include the documents specified in Article 15 of Decree No. 110/2005/NĐ-CP.

b) Application form for issuance of Multi-Level Marketing Organization Registration Certificate shall be implemented in accordance with Model MD-1 prescribed in Appendix II attached hereto.

c) Those who head the enterprise as specified in Clause 5, Article 15 of Decree No. 110/2005/NĐ-CP include the owner of a private enterprise, a general partner of a partnership company, members of the Board of Members, Chairman of the Company, members of the Board of Directors, General Director (Managing Director), and other important managerial positions as stipulated in the Company's Articles of Association for limited liability companies and joint stock companies.

5. Basic contents of the Model Multi-Level Marketing Participation Contract

a) Name of the enterprise, main office address, and legal representative of the multi-level marketing enterprise;

b) Full name, permanent residence (or registered residence for foreigners) of the participant, place of temporary residence registration, identity card number (or passport number for foreigners); work permit number of the participant who is a foreigner;

c) Origin, type, quality, price, utility, and usage method of goods sold, resale price of goods, conditions and scope of warranty for goods (if applicable);

d) Method of calculating commission, bonus, or economic benefits that participants receive from their own marketing sales and those of their subordinate participants in the network they organize, accepted by the multi-level marketing enterprise;

đ) Rights and obligations of the multi-level marketing enterprise and participants including the binding responsibility of the multi-level marketing enterprise to compensate consumers or participants for damages;

e) Circumstances for terminating and settling the multi-level marketing participation contract.

6. Procedure for issuing Multi-Level Marketing Organization Registration Certificate

a) Receiving application files for issuance of Multi-Level Marketing Organization Registration Certificate

- The issuing authority for Multi-Level Marketing Organization Registration Certificate is responsible for receiving application files for issuance of Multi-Level Marketing Organization Registration Certificate.

- The receiving authority must issue a receipt. The receipt for application files is made in two copies according to Model MTB-1 prescribed in Appendix II attached hereto, one copy given to the enterprise requesting issuance of Multi-Level Marketing Organization Registration Certificate and one copy retained by the issuing authority for Multi-Level Marketing Organization Registration Certificate.

- For incomplete or non-compliant application files, within a maximum of three working days from the date of receipt, the receiving authority for application files for issuance of Multi-Level Marketing Organization Registration Certificate must notify the enterprise submitting the application files in writing about the requirements to supplement and complete the application files according to Model MTB-2 prescribed in Appendix II attached hereto.

- The enterprise has the right to request the receiving authority to clearly explain the requirements to supplement and complete the application files, and the receiving authority is responsible for responding to the enterprise's request.

- In cases where no supplementation of application files is required, the review period for the application files starts from the date of receipt.

b) Reviewing application files to decide on issuance of Multi-Level Marketing Organization Registration Certificate

- Within fifteen working days from the date of receipt of complete and valid documents, based on the received documents and relevant current laws, the competent authority issuing the Multi-Level Marketing Organization Registration Certificate shall examine the application to decide whether to issue or refuse the Multi-Level Marketing Organization Registration Certificate.

- In case of refusal to issue the Multi-Level Marketing Organization Registration Certificate, the competent authority issuing the Multi-Level Marketing Organization Registration Certificate must respond in writing, stating clearly the reasons for refusal.

c) The Multi-Level Marketing Organization Registration Certificate

- The Multi-Level Marketing Organization Registration Certificate shall be filled out according to Model MG-1 prescribed in Appendix II attached hereto.

- The Multi-Level Marketing Organization Registration Certificate shall be made in two original copies, one copy issued to the enterprise requesting the Multi-Level Marketing Organization Registration Certificate and one copy retained by the issuing authority.

- The issuing authority of the Multi-Level Marketing Organization Registration Certificate shall record the registration number as follows:

+ Province code: two digits (as prescribed in Appendix I attached hereto).

+ Business entity type code: 01 for a private business, 02 for a limited liability company with two or more members, 03 for a joint stock company, 04 for a single-member limited liability company, 05 for a partnership, 06 for a cooperative, 07 for a joint venture, 08 for a wholly foreign-owned enterprise, 09 for a state-owned enterprise.

+ Business entity sequence number: six digits, ranging from 000001 to 999999.

+ The codes shall be separated by a hyphen.

Example of recording the registration number of the Multi-Level Marketing Organization Registration Certificate: For a private business registering its operations in Hanoi, the registration number of the Multi-Level Marketing Organization Registration Certificate would be recorded as follows:

01-01-000002 (Multi-Level Marketing Organization Registration Certificate issued to the second private business in Hanoi).

d) Payment of fees for issuing the Multi-Level Marketing Organization Registration Certificate

Prior to delivering the Multi-Level Marketing Organization Registration Certificate to the enterprise requesting it, the issuing authority shall collect the fee for issuing the Multi-Level Marketing Organization Registration Certificate in accordance with the guidelines of the Ministry of Finance.

7. Issuance of additional Multi-Level Marketing Organization Registration Certificates

a) Documents for requesting issuance of additional Multi-Level Marketing Organization Registration Certificates include:

- An application for issuance of additional Multi-Level Marketing Organization Registration Certificates according to Model MĐ-2 prescribed in Appendix II attached hereto;

- The original Multi-Level Marketing Organization Registration Certificate already issued by the competent authority;

- Relevant documents concerning changes in the Sales Program.

b) The procedure for issuing additional Multi-Level Marketing Organization Registration Certificates shall be carried out in accordance with the guidance provided in Clause 6 of this Circular.

The issuing authority of additional Multi-Level Marketing Organization Registration Certificates shall only record the supplementary registration details and confirm them on the Multi-Level Marketing Organization Registration Certificate already issued to the enterprise.

8. Reissuance of Multi-Level Marketing Organization Registration Certificates

a) Reissuance of Multi-Level Marketing Organization Registration Certificates in cases where the Multi-Level Marketing Organization Registration Certificate is lost

- When the Multi-Level Marketing Organization Registration Certificate is lost, the enterprise must immediately report to the police station at the location where the certificate was lost and notify the issuing authority.

- Within a maximum period of seven working days from the date of reporting to the police, the enterprise must request the issuing authority to reissue the Multi-Level Marketing Organization Registration Certificate.

- Documents for requesting reissuance of the Multi-Level Marketing Organization Registration Certificate include:

+ An application for reissuance of the Multi-Level Marketing Organization Registration Certificate according to Model MĐ-3 prescribed in Appendix II attached hereto;

+ Confirmation from the police station regarding the enterprise's report of loss of the Multi-Level Marketing Organization Registration Certificate.

b) Reissuance of Multi-Level Marketing Organization Registration Certificates in cases where the Multi-Level Marketing Organization Registration Certificate is torn or damaged

- In cases where the Multi-Level Marketing Organization Registration Certificate is torn or damaged, the enterprise has the right to request reissuance of the Multi-Level Marketing Organization Registration Certificate.

- Documents for requesting reissuance of the Multi-Level Marketing Organization Registration Certificate include:

+ An application for reissuance of the Multi-Level Marketing Organization Registration Certificate according to Model MĐ-3 prescribed in Appendix II attached hereto;

+ The original Multi-Level Marketing Organization Registration Certificate that is torn or damaged.

c) Procedure for reissuance in cases where the Multi-Level Marketing Organization Registration Certificate is lost or torn/damaged

- Upon receiving the documents from the enterprise in the cases specified in Points a and b of this Clause, the issuing authority of the Multi-Level Marketing Organization Registration Certificate shall issue a receipt. The receipt for the documents shall be made in two copies according to Model MTB-1 prescribed in Appendix II attached hereto, one copy given to the enterprise requesting the Multi-Level Marketing Organization Registration Certificate and one copy retained by the issuing authority.

- Within five working days from the date of receipt of complete and valid documents, the issuing authority of the Multi-Level Marketing Organization Registration Certificate shall reissue the Multi-Level Marketing Organization Registration Certificate to the enterprise according to Model MG-1 prescribed in Appendix II attached hereto. The reissued registration number shall be the same as the number recorded in the lost, torn, or damaged Multi-Level Marketing Organization Registration Certificate. The reissued Multi-Level Marketing Organization Registration Certificate shall clearly indicate that it is a reissue.

- Prior to delivering the Multi-Level Marketing Organization Registration Certificate to the enterprise requesting reissuance, the issuing authority shall collect the fee for issuing the Multi-Level Marketing Organization Registration Certificate in accordance with the guidelines of the Ministry of Finance.

d) Reissuance in cases where the Multi-Level Marketing Organization Registration Certificate is revoked or the right to use it is suspended

- The issuing authority of the Multi-Level Marketing Organization Registration Certificate shall not consider applications for reissuance of the Multi-Level Marketing Organization Registration Certificate from enterprises that have had their certificates revoked or had their right to use them suspended within one year from the date of the revocation decision or suspension decision.

- The reissuance of the Multi-Level Marketing Organization Registration Certificate to enterprises that have been revoked or had their right to use it suspended by a competent state authority shall be carried out as if it were a new issuance of the Multi-Level Marketing Organization Registration Certificate.

9. Network Member Card

a) Within seven working days from the date of signing the multi-level marketing sales participation contract, the multi-level marketing sales enterprise must issue a multi-level marketing sales network member card to the participant.

b) The multi-level marketing sales network member card shall include the following basic information:

- Name of the multi-level marketing sales enterprise;

- Head office address and telephone number of the multi-level marketing sales enterprise;

- Full name and identification number (or passport number) of the participant;

- Number of the multi-level marketing sales network member card;

- A photograph of the participant measuring 4cm x 6cm taken within six months prior to the date of signing the multi-level marketing sales participation contract;

- Date of issuance, signature, and seal of the representative of the multi-level marketing sales enterprise;

- Regulations for the use of the card.

c) The multi-level marketing sales network member card shall be arranged according to Model MT-1 as prescribed in Appendix III issued together with this Circular.

d) The multi-level marketing sales enterprise shall replace or issue a new card to the participant in the following cases:

- The card is torn or lost;

- There is a change in one or more of the contents specified in point b of this clause.

đ) The multi-level marketing sales enterprise shall be responsible for recalling the multi-level marketing sales network member card when terminating the multi-level marketing sales participation contract in accordance with Article 10 of Decree No. 110/2005/NĐ-CP.

10. Notification of Multi-Level Marketing Sales When the Multi-Level Marketing Sales Enterprise Expands its Network

a) When the multi-level marketing sales enterprise expands its sales network to provinces or centrally-administered cities where it does not have its head office, the enterprise must notify the Department of Trade or the Department of Trade and Tourism of that province or centrally-administered city. Such notification shall be made in accordance with the Multi-Level Marketing Sales Organization Notification Form (MTB-3) as prescribed in Appendix III issued together with this Circular.

b) After receiving the multi-level marketing sales notification from the enterprise, the Department of Trade, the Department of Trade and Tourism shall be responsible for supervising and monitoring multi-level marketing sales activities in their respective areas and handling violations according to their authority or reporting to the competent authority for handling violations related to the management of multi-level marketing sales activities in accordance with the law.

11. Implementation

a) The Department of Trade, the Department of Trade and Tourism, based on the provisions of the law and the guidance of this Circular, shall assist the People's Committee of the province in organizing the issuance of the Multi-Level Marketing Sales Organization Registration Certificate; regularly inspecting, supervising, and handling violations in multi-level marketing sales activities in their respective areas.

b) Annually before January 15th, the Department of Trade, the Department of Trade and Tourism shall be responsible for reporting to the competition management agency under the Ministry of Trade about the inspection, supervision, and handling of violations in multi-level marketing sales activities in their respective areas.

c) In case of necessity, the Department of Trade, the Department of Trade and Tourism shall be responsible for reporting issues related to multi-level marketing sales activities in their respective areas to the competition management agency under the Ministry of Trade upon request.

This Circular shall take effect fifteen days from the date of publication in the Official Gazette. During the implementation process, if there are difficulties or obstacles, please promptly report them to the Ministry of Trade for research, amendment, and supplementation./.