Question: My enterprise is currently operating in the field of multi-level marketing and has a plan to expand the market in Vietnam. I am aware that there are new regulations with stricter controls on registration and operational conditions. May I ask what requirements the enterprise needs to satisfy and what the risks are if it fails to comply with the new regulations?

Conditions for Multi-level Marketing Business under Decree 137/2026/ND-CP

Answer:

1. Main contents

Decree 137/2026/ND-CP on the management of multi-level marketing business activities, effective from 01/07/2026, has prescribed a stricter and more comprehensive legal framework regarding registration and operational conditions for multi-level marketing activities in Vietnam, specifically including the following core contents:

– Conditions for registration of multi-level marketing activities: Enterprises must simultaneously satisfy conditions regarding finance and operational systems, including:

+ Establish an escrow deposit with a minimum level equal to 5% of the charter capital, however, not lower than 20 billion VND. This condition is set out to ensure the financial capacity and responsibility of the enterprise toward participants in the multi-level marketing network.

(Legal basis: point c clause 1 Article 8 and clause 2 Article 50 Decree 137/2026/ND-CP).

+ Develop a comprehensive system of legal documents, including multi-level marketing participation contracts, operational rules, commission/bonus plans, and basic training programs that are clear, transparent, and consistent with the provisions of law on the management of business activities under the multi-level method.

(Legal basis: point d clause 1 Article 8 Decree 137/2026/ND-CP).

– For foreign investors: The Decree sets out an additional requirement of having at least 03 years of continuous operational experience in the field of multi-level marketing in another country or territory, aiming to screen and ensure the quality of investors participating in the Vietnamese market.

(Legal basis: point e clause 1 Article 8 Decree 137/2026/ND-CP).

– Forms applied in the management of multi-level marketing activities: The Decree has issued a system of 23 new forms related to registration, amendment, notification, and management of multi-level marketing activities at Appendix I attached to this Decree, requiring enterprises to update and use them correctly according to regulations.

2. Greatest impacts

The new regulations have significantly increased the barriers to entry and requirements for maintaining operations for multi-level marketing enterprises, forcing enterprises to strengthen their financial capacity through escrow obligations, while simultaneously investing more professionally in the governance system and legal compliance mechanisms.

Besides, the standardization of elements such as participation contracts, operational rules, and training programs contributes to improving market transparency, thereby promoting a healthier and more sustainable competitive environment.

However, for enterprises that have not yet perfected their corporate organization and operational processes, these requirements may create significant pressure, especially during the transitional period between the old regulations and the new regulations.

3. Risk of non-compliance

– If the enterprise does not fully satisfy the conditions as prescribed, it may not be eligible to be licensed or may have its multi-level marketing activities suspended, directly affecting the ability to maintain business operations.

– The failure to perform the escrow deposit or the failure to construct a full system of documents such as participation contracts, operational rules, commission/bonus plans, and training programs according to regulations may be considered a violation of the law, leading to the risk of administrative penalties.

– During the transitional period, if the enterprise does not promptly perfect the conditions according to the new regulations, it may not satisfy the requirements to continue operations, thereby leading to the disruption of business activities and the potential legal risks.

4. Proposed action plans

– Enterprises need to urgently review all legal conditions and financial capacity to ensure satisfaction of the escrow requirements according to regulations before the time the Decree takes effect.

– Actively construct and perfect the set of internal documents including participation contracts, operational rules, training programs, and commission/bonus plans according to the new standards, in order to both ensure legal compliance and improve the operational efficiency of the system.

– Update and correctly apply the new system of forms during the process of registration, amendment, and reporting of multi-level marketing activities, limiting the risk of errors and rejection of dossiers.

5. Notes and recommendations

– Establishment of internal control mechanisms: Enterprises need to construct and maintain an internal control system to ensure that the compliance with multi-level marketing business conditions is performed continuously and consistently throughout all activities. At the same time, attention should be paid to training and updating new legal knowledge for the personnel team to minimize the risk of violations.

– Notes for enterprises with foreign elements: Enterprises need to particularly review and ensure satisfaction of the conditions regarding multi-level operational experience in foreign markets before participating in the Vietnamese market, avoiding the risk of being ineligible under legal conditions.

– Consultation with legal experts: During the implementation process, enterprises should actively consult the opinions of experts to ensure that the application of regulations is accurate, while simultaneously limiting legal risks that may arise.