REGULATIONS ON DEPOSIT OF MULTI-LEVEL MARKETING ENTERPRISES

25/01/2019, 10:15 AM

Decree 40/2018/ND-CP ("Decree 40") dated March 12, 2018 on the management of business activities by multi-level method takes effect, raising the deposit amount for multi-level marketing enterprises compared with the regulations in Decree 42/2014/ND-CP – which has expired. Accordingly, the amount of deposit that multi-level marketing enterprises must adhere to in the new regulation is “equivalent to 5% of charter capital but not less than VND 10 billion” at a commercial bank or a foreign bank branch in Vietnam.

On November 30, 2018, the State Bank of Vietnam issued Circular No. 29/2018/TT-NHNN (“Circular 29”) guiding confirmation and management of deposit of multi-level marketing enterprises. Circular 29 has specifically defined deposit regulations in addition to the provisions of Decree 40.

Specifically, Clause 1 Article 3 of Circular 29 specifies the main contents of the deposit contract between the deposit banks and multi-level marketing enterprises including: name, address, legal representative of enterprise; name, address, legal representative of the bank (or bank branch) receiving the deposit; deposit amount; purpose of deposit; deposit interest rate; form of payment of deposit interests; using deposit money; withdrawal of deposit; deposit account balance; and responsibilities of related parties and other contents in accordance with the provisions of law. Additionally, Article 3 of the above Circular also stipulates the procedures in the case of the enterprise changing the information on the Certificate of Margin or if the enterprise changes its charter capital and needs to adjust the deposit amount.

The deposit interest rate for the above deposit is also stipulated in Article 5 of Circular 29. Accordingly, the deposit interest rate will be agreed by the two parties in the deposit contract but must be consistent with regulations on interest rates of Vietnamese dong deposits of the State Bank of Vietnam in each period.

In addition, Circular 22 clearly stipulates the responsibility of the deposit banks in Article 8 and related units of the State Bank of Vietnam including the Payment Department, Banking Inspection and Supervision Agency, Provincial State Bank Branches in Article 9 in the performance of deposit of multi-level marketing enterprises. This enhances the responsibilities of relevant agencies and organizations in implementing deposit regulations to protect the rights and interests of both deposit banks, multi-level marketing enterprises, and multi-level marketing participants.

Thus, the deposit regulations in Decree 40, Circular 29 clarified deposit issues in order to help deposit banks and multi-level marketing enterprises comply with specialized law regarding multi-level marketing businesses.

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