Propose new regulations on the management of multi-level marketing (MLM) activities

1. Amendment and addition to the regulations relating to the private placement and trading of corporate bonds

The Ministry of Finance is preparing a decree amending and supplementing a number of articles of Decree No. 153/2020/ND-CP of December 31st2020 providing for the private placement of corporate bonds for trading in the domestic market and the offering of corporate bonds in the international market.

Some notable contents of the draft include:

(I) Firstly, to amend and supplement the regulations relating to the subject of bond issuance in Article 5 of Decree No. 153/2020/ND-CP. Specifically, the draft clearly states that companies are not permitted to issue bonds to provide capital in any form, to purchase shares, to purchase bonds of other companies, or to lend capital to other companies. The settlement helps close the loophole that many companies have taken to issue bonds for the wrong purposes, helping to strengthen the issuer’s liability and obligation to use the proceeds of the bond issue for good endings.

(ii) Second, detail the regulations on bond buyers. Specifically, the Draft adds Point d, Clause 1, Article 8 as follows: “Before entering into a bond purchase/sale transaction, an investor must identify himself as a professional securities investor” .

(iii) Third, complete the requirements that bond offering documents must have credit rating results for certain types of bonds issued. Accordingly, the new draft amendment to Clause 2 of Article 12 on bond offering documents requires: “The credit rating results of credit rating agencies for bond issuers and bonds issued in the event of the issue of bonds to professional investors in securities who are individuals, issuing bonds without guarantee, without guarantee of payment, the issuing company has achieved a loss of commercial result in the year preceding the year of issue or has accumulated losses in the year of issue.

(iv) Fourth, complete the regulations relating to the representative of bondholders when signing contracts with issuers (amendment point c, paragraph 2, article 12). More specifically, the Project completes: “The representative of the bondholders is responsible for supervising the use of the capital raised by the issuance of bonds, receiving and managing the guarantees, monitoring the implementation of the company’s commitments issuer and to exercise other responsibilities in accordance with the provisions of securities law. This involves strengthening the monitoring of the purpose of use of the issuer’s bond capital as well as strengthening the monitoring of the implementation of the issuer’s other commitments.

(v) Fifth, complete the specific regulations relating to the documents and procedures for recording transactions on the system for trading corporate bonds for private placement on the Stock Exchange (Article 16 ter); on the modification, cancellation of registration of transactions on the trading system of corporate bonds offered for private sale on the Stock Exchange (Article 16c).

(vi) Sixth, amend a number of regulations relating to the timing and content of disclosure of information; while enhancing the transparency of bond issuers and their use of bond issue capital.

2. Propose new regulations on the management of multi-level marketing (MLM) activities

The Ministry of Industry and Commerce is collecting comments from the public with the draft circular amending and supplementing Circular No. 10/2018/TT-BCT detailing a number of articles of Decree No. 40/2018/ND- Government CP on MLM business management.

The Draft introduces the following rules:

(i) The process of organizing the MLM knowledge test for local elected officials.

The process includes the following steps: Verification of the completeness and validity of the registration file to verify the knowledge of the local representative in accordance with the regulations; establish a plan for the time, place and method of the examination and notify the Department of Competition and Consumer Protection in writing of the organization of the examination in the event that the Department of Industry and commerce organizes the examination; announcement of the test plan; organize the exam; evaluate test results; report test results and issue certificates.

(ii) Reduced requirements for evaluation of test results

The draft amendments and supplements to the regulations on examination forms and the evaluation of test results. As a result, the MLM Knowledge Legal Knowledge Test for Local Representatives is conducted as an essay or multiple choice in a minimum time of 60 minutes.

Test results are scored on a 100-point scale, with specific requirements as follows:

Điểm kiểm tra được chấm theo thang điểm 100, yêu cầu cụ thể như sau:

  • For the MLM business legal knowledge test, the test score less than 80 points (replacing the current 90 points) for the multiple choice test and less than 65 points (replacing the current 75 points) for the essay form is not satisfactory.
  • Regarding the knowledge test for local representatives, the test result with less than 70 points for the multiple-choice test and less than 50 points for the essay form is not satisfactory.

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