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Multi Level Marketing Sale company in Vietnam

Multi Level Marketing Sale company in Vietnam

Multi Level Marketing Sale company in Vietnam

(S&B Law) Foreign investor intends to setup a Wholly Foreign Invested Company (hereinafter referred to as “New Co”) in Vietnam to conduct with trading of products under the Multi Level Marketing Sale (MLM), they have to meet the following these below legal procedures:
1. Obtainment of Investment Certificate

Under Vietnam Law, in order to setup a Foreign Invested Company including Wholly Foreign Invested Company and Joint Venture Company, Foreign Investor must apply for an Investment Certificate (hereinafter referred to as “IC”). IC shall be deemed as the Certificate of Incorporation of Foreign Invested Company in Vietnam.
For obtaining an IC, Foreign Investor must prepare an investment project which comprise of a collection of proposals for the expenditure of medium and long term capital in order to carry out the investment activity in Vietnam and for a specified duration. Accordingly, the relevant competent authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on
  1. legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the New Co shall register its head-office and
  2. Financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.
According to Vietnam’s WTO Commitment, the distribution right (retail and wholesale) as classified to the CPC 622, 631, 632 and Trade Agency as classified to the CPC 621 shall be granted to wholly foreign invested company in Vietnam from the year of 2009.
We also further note that the procedure for establishment of the New Co in Vietnam generally takes a rather long time in comparison with other countries in the region. Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2005 is only 45 days, the actual process may take a longer time due to that the competent authority must consult other relevant ministries inclusive of Ministry of Industry and Trade, Ministry of Planning and Investment and Ministry of Finance to evaluate the investment project.
2. Obtainment of Sub-License for Multi Level Marketing Sale
Upon completion of obtainment of Investment Certificate, the New Co must further carry out with necessary procedure for obtaining Sub-License for Multi Level Marketing Sale in Vietnam. 

In line of Vietnam Law, Multi Level Marketing Sale must satisfy following conditions:

a. The marketing to retail goods is conducted through a multi-level and multi-branch network of participants in the multi-level sale;
b. Goods are marketed by participants in the multi-level sale directly to consumers at the customers' homes, working places or other places other than regular retail places of the enterprises or participants;
c.  Participants in the multi-level sale enjoy commissions, bonuses or other economic benefits from the sale results of their own and of lower-level multi-level sale participants within the network which is organized by themselves and approved by the multi-level sale enterprises. Vietnam Law also further require that before obtainment of sub-license for Multi Level Marketing Sale, the New Co must pay a deposit which is equal to 5% of its charter capital and must not be lower than VND one billion (about 500,000USD) at a commercial bank operating in Vietnam. According to Vietnam Law, it shall take 15 working days from submission of application dossier to the provincial competent authority to obtain the sub-license for multi level marketing sale. However, in practice, the process may be much longer.

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