Reference situation:

A company is going to operate in the multi-level marketing business (bán hàng đa cấp). In particular, the company will organize a network in which a participant can receive commissions, bonuses and other economic benefits from the business results of this participant and other participants in the network. The company is going to trading tables. The company would like to consult lawyers about legal conditions for doing this business.

Legal grounds:

1. Decree No. 40/2018/ND-CP on the management of multi-level marketing business
2. Circular No. 29/2018/TT-NHNN guiding on the confirmation and management of escrow deposit of companies operating in the multi-level marketing business
3. Circular No. 10/2018/TT-BCT detailing some articles of Decree No. 40/2018/ND-CP on the management of multi-level marketing business

Our legal advice:

The company should be eligible for the following legal conditions regarding its multi-level marketing business:

1. Legal conditions for the issuance of License for multi-level marketing business 

• The company has VND 10 billion or higher of charter capital
• Owners and legal representatives of the company have not worked in any other company of which the license for multi-level marketing business is revoked
• The company must provide an escrow deposit equivalent to 5% of its charter capital but not lower than VND 10 billion with a commercial bank or branches of foreign banks in Vietnam
• Other legal conditions as provided in Article 7 of Decree No. 40/2018/ND-CP.

2. Goods which can put into the multi-level marketing business 

After the company is permitted to operate in multi-level marketing business, the company is not permitted to trade the following goods: Goods banned from trading, drugs, medical equipment, veterinary drugs (including aquatic veterinary drugs), plant protection products, insecticidal and germicidal products restricted or banned from household and medical sectors, dangerous chemicals, and digital information products.

3. Notably, the company must not carry out prohibited activities provided in Article 5 of Decree No. 40/2018/ND-CP 

Please click here to explore the detailed procedures for the issuance of the license for the multi-level marketing business.