Proposed Draft Bill fo MLM in Kerala - June 2013

7/28/2019 Proposed Draft Bill fo MLM in Kerala - June 2013

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JI' t,tfl,ltfl[t,til^ffit^MULTI LEVEL MARKETING

Proposed Features for the Draft Bill

ICS. Srinivas IASSecretary (ndusries)Governmentof Kerala

Multi-level MarketingRegulatory Authority #c-The Government shall constitute a Multi-level Marketing Regulatory Authority inthe State for the purposes of registration,control and supervision of multi-levelmarketing.Registration is mandatory for MLMEntities, Direct Sellers and Distributors.

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[email protected] www.fb.com/urtsam +91 - 9711572735

www.myvestige.com www.fb.com/prosumers urtsam.in


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AddI. Controller #ddThe Government may designate in eachDistrict an officer to be the AdditionalController of the Authority to assist theController and to perform such otlrerfuncti-ons as may be prescribed or assigned tohim by the Controller.

i,r i,Powers & Functions of the Authorifv &3b'"To implement the provisions of this Act and the rules made thereunder.

To glve registration or to refuse registration to multi-level marketingentltres.To give registration or refuse regisration to the direct sellers anddistributors under the multi-level marketing entities and to keepregisters of such registrationTo issue identrtv cards to the direct seller and distributors.To control and supervise the conduct of multi:level marketing inthe State.To receive returns relating to the business conducted by the multi-level marketing entities and the direct sellers and distributors underthem.To monitor the tax being paid b1'the multi-level marketing entitiestothe Commercial Taxes Departrnent of the Government of Kerala.

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Powers of the AuthorityTo inspect and call for the records relating to direct marketingfrom the multi-level marketing entities, direct sellers anddistributors.To receive complaints from the direct sellers, distributors,customers and consumers against the multi-level marketingentities and to provide for seitlement of disputes among themor to give legal advise for taking appropriate legal actions inaccordance with the law for the time being in tbrce so as toremedy their grievances.To ensure that the consumers are not being cheated by anymulti-level marketing entities or direct sellers dnd distributorsunder them.

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. To perform such other functions and duties as may beprescribed.

Registration of MLM EntityEvery multi-level marketing entitycarrying on multi-level marketing in theState shall, within such date as theGovernment may appoint in this behalf,apply for registration before the Authorityand every such entity which intends tocaffy on such marketing in the State shallapply for registration.

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How to apply for RegistrationThe application shall be made in such form and in suchmarurer as may be prescribed.Application should contain the following:A gopy of the latest balance sheet, profit and loss accountand reports, if any, of the auditois or directors of theapplicant.Multi- level marketing scheme including the .income plan,of the applicant in respect of that business.Such other information and documents as may be prescribed.Receipt of payment of registration fee, which shall be paid insuch manner as may be prescribed.

Securif DepositWhere a registration has been granted by theAuthority, it shall require the multi_levelmarketing entity to deposit an amount as securityas may be prescribed, which shall beproportionate to the total turnover of such entityat the time of registration.After depositing the security amount, theAuthority shall issue a certificate of registration insuch form as may be prescribed.

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Refusal of RegistrationThe Authority may refuse registration of a multi-levelmarketingentity on the following grounds, namely:-- If multi-level marketing entiry or person or persons responsible forthe conduct of such ent-itv hai been convicted under the Prize Chitsand Money Circulation Schemes (Banning) Act, 1978 (Central Act43 of 1978) or the Securities and Exchange Board of India Act,1992 (Central Act 15 of 1952) in relation to the conduct of thebusiness by such entityl- If the previous registration certificate has been revoked for any

reason.- If the previous registration has been cancelled within a period ofone year preceding the date ofapplication.- If the applicant fails to furnish sufficient details as required underthis Act or the rules made there under.

Validity of Registration CertificateEvery Registration Certificate granted orrenewed, unless revoked, shall be valid for aperiod of three years from the date of issue ofthe certificate.Every multi-level marketing entity shall renewthe registration certificate within one month ofits expiry:




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Revocation of RegistrationThe Controller may revoke a certificate of registrationissued under this Act for the following reasons,namely:-I. If the mutti-level marketing entity has been convicted,in relation to the conduct-of its business. under theActs stated in clause (i) of section 7.il. If the multi-level marketing entity has failed toc.o.mRlf with_ any of the conditions specified under

this Act or the rules made there undei in relation tothe conduct of its business;III. If the multi-level marketing entity has failed tocomply with the conditioni imposed as per thecertifi cate of registration;

Revocation of Registration (canr...; ffi iIV.

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If its. found that any materiat information in relation to themultr-level marketing entity was not disclosed at the time ofregrstratlo_n or renewal of the certificate of registration andthe certificate of registration -was obtainea ".t"ti"g 'AfrL,misleading or ina-ccurate information or on" mis-representation;If a number of complaints affecting the interest of theconsumers or direct sellers or distributors working under themulti-level marketing entity have been receiv"ed in ih;Government or to theControiler, against suct entity;The- multi-level marketing entity has ceased to carry on thebusiness for which the'regislratlon certincatt ilr"'L;;;obtained.

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Surrender of Certificate of Registration:E-f\

A multi-level marketing entity may surrender its certificateof registration at any tiire afti:r eivine one month,s writtennotice to the Authority and a plblic"notice in its web-siteand in four daily newi papers having wide publicity in theState.On receipt of a notice, the Controller shall make an enquirvwithin 15 days of such notice and he shall ascertuin is t[,whether all the payments and other benefits lawfully due tothe consumers, direct sellers and distributors from themulti-level marketing entity has been paid or remitted a;Ahe shall fix the amoui-rt andpass orders to pay such a-ourrtdue to the consumers, direcisellers and disiributors.

SurrenderWhere the amount payable as per the decision of thecontroller is not paid or remitted within the time allowedby the Controller, he shall order to pay such amount fromthe security deposit of the multi-level marketing entitydeposited with the Authority at the time of registraiion.Where the amount of security deposit is not sufficient topay the amount fixed, it shall be recovered from the assetsof such multi-level marketing entity as if it is an arrear ofland revenue due and in case there is balance amount ofsecurity deposit after payment of the amount fixed undersub-section,(1), such amount shall be repaid to the multi_level marketing entity concerned.

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Registration of Direct SeIIersF.u".V direct seller of a multi-level marketing entity shall resisterhis or irs name with the auilroiiry ;;a il;r;ii;f i,;';ii"';Bii ordirect sellers kept in the Authoiiry *a o-utuin u "".tiiii#-#rr"tnrollment ln the manner and in such form as may be prescribed.An application for enroilment as a direct seller shalr be made to theIle19 quarters ot the Authoriry or at the District Office of the111L.,,ry , t ne, application shall contain the registration numberand other details of the multi_level marketing en-tity, true coov ofthe marketing contracr with that ""tiry ;;J ;-u;;iiru';;t"ii5;"aoocuments as may be prescribed.The Authority shall, after conducting an enquiry issug a certificateof enronmeni to the uppii."rt *iifiir" ii h"t", i;;ri i " l"i" .rreceipt of such applicatioh.I-r1ajre91 seller is registered and enroiled, the Authority shail issuea pnoro loentrty card to the direct seller in the prescribeil form.

Disqualifications for Direct Seller' No person or othe.r entity shail be eligibre to get registered,or continue, as a direct seller if he rs,_

convicted of an offence involving moral turpitude;declared as an insolvent as per the provisions of the law fo, th" ti*"Delng tn torce;

' not mentally fit to deal with the customers or consumers;. is,not having such other qualifications as may be prescribed;. is not permitted by any other law applicable to him.




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Registration of Distributors ffiEvery person who is sponsored as a distributor of amulti-level direct marketing entity by u direct sellershall, by himself or through his direct seller, getregistered and enrolled in the ro11 of distributors keptin the District Office of the Authority.An application for enrollment shall be made to theDistrict Officer concerned of the Authority with suchfee and in such form and in such manner as may beprescribed.

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*'it;*ppealAny person aggrieved by an order of theController may appeal to the Government,within such time and with such fee and inthe manner as may be prescribed.Any person aggrieved by an order of aDistrict Officer of the Authority may appealto the Controller within such time and withsuch fee and in the manner as may beprescribed.

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CPC Powers to ControllerIn deciding all_matters under. this Act, the_controller shail have the power to regulatehis own procedures and for the purpoie 6lriklne rni"rq;it"; irG;iie#on ,n0.,thjs^f9!. he shall have the same powers as are vested'in a biril court un8ei the cooeof civil Procedure. t908 (centrila.is orliost*tii. t.yire. *iil, i.rp.a ortn.following matters, namely:-- summoning and enforcing the attendance of any person and examining him onoath;- lj::q::ry and production ofany documenr or other material object producible asevloence;- reception of evidence on affidavits;- issue of commissions for examination of witnesses.

Any enquiry or investigation before the controller shall be deemed to be a iudicialproceeo.rng wrthln the meaning of sections I93 and 22g of the Indian pendl code(central Act 45 of, I 860) and th"e contro[eist ai G a"erned i" b; ;;;ii *;ri for thepurposes or sectron I95 and chapter XXVI of the Code of criminal procedure, lg73(Central Act2 of t974).

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Conditions for Direct SellingII.

It.shall be a legal entity authorised to conduct business in India in accordancewith the provisi-ons of tlre laws in forti.--"---- ---'It shall have a resistered trademark which identifies the entity, goods orservices distributed."It shall maintain records .both manuar as weI as .erectronic, with compretedetails of their goods, services, t..*s J' **i.ii,ir'"., rncome pran, detairs ofdirect setters u-nder it unu arr-iiiiu*t lrlli*Iiil. ,uri-ih;;ilj^,ii".,iabusiness. The websites of a murti-iivei';r;iiy ;ilii;. updated ,;dit;iy. '' -"lLslyll lot

require a direcr.seller or distributor ro purchase any goods or serviceor to pay any membership fee as a condition'pr..ioini'for-;;;iri;ii""';,.enrollment of director selleis or distributors. - ' ''It shall not require the direct seilers to pay any money by way of renewalcharges.It shall ensure full refund o[ the price of any goods retumed by its consumerson the ground o[anv defect or inierior qruiiiy?i"ugui"ii irr. i.'i""r.;i;ili;"J"by it regarding such goods. witt in tniriylay;'"G;r"#;;;.'rr! .r'Iv'| r'Ira'[rurr 6r ve

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Conditions for Direct MarketingThe income plan of a multi-level marketing entity shall notbe based on the number of new direct seliers registered ordistributors enrolled. The benefits received by airy multi-level marketing entity, direct seller or distributoi shall beonly as a result of selling goods or providing services andshall not be in connection *itn the number -of registrationof diregt sellers or enrollment of distributors.It shall not.restrict the number of distributors that can beregistered or enrolled by direct sellers under this Act orrequire them to enroll any fixed number of distributors forreceiving any type of commission, incentive or otherbenefits.

Information to be made tothe Consumers during SalesName, ad^dress' register number or enrolrment number and terephonenumber of the direit seiler, distributoi,-is'ih. .ur" may be, and of themulti-level marketing entity boncernra. ' -- "A description of the goods or services to be suppliedThe order date. the torar amount to be paid by the consumer arong with thebilland receipt.Time and place for inspection of the sample and delivery of goods.A notice to the consumer of the consumer's rights to cancer the order and toreceive a full refund of sums paid. - -"-'- "cDetails regarding the complaint redressal mechanism of the multi_levelmarketingintitylThe d-irect sellers or their_distributors shall at all times carry identitv oroofissued by the mutti-levet.mu.r."ting ;;tiiy;ilg';th;y ptl'ti"illntitycards issued by the Authority. urrr p"v'!v .u!

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Signed Receipt to the CustomerOn receiving payments with respect to sale of goods orservices, the direct seller shall issue a signed ."""ilt to thecustomer concerned in accordance with provisioni gf theIndian Stamp Act, 1899 (Central Act 2 o7 tb7Ol in such formas may be prescribed, which shall contain the grounds forcancellation of the transactions and such othei terms andconditions in respect of the sale of goods or servicesconcerned.A. customer may rescind a direct sales contract at any timewithin thirty days from the date of direct sales contiact byserving on the direct seller or distributor a notice in such formas may be prescribed.

.i;*,Issue of Cash Bill to the PS-S.1"Consumer & keeping RegistersEvery direct,s.eller and distributor who sells goods to a consumer shallrssue a cash bill to such consumer in accorda"nce with it "-i.*iiibn, orthe law for the time being in force in tf,i, i"ip""t. ' --Eve.ry direct seller and distributor shall keep such register or registersstating the.details of the.products, price, iax ana sul"n oit*i'd"t?ir, inrespect of the goods sord 6y him, in'such form ur *iy t" pi"r"ri6io.The Authority and the officers concerned of the commercial raxesDepartment ihalt be competenr to cail for such registers- ioi anypurpose in accordance with the provisionr oi uny r;';6; ti,"" ti*"being in force.Not withstanding anything.contained in this Act, every direct seiler andd istri butor shal I ioniply fi tn iti. pi""iii"rr or ttre reiat a' Vrr r.' Ioo"oTax Act, 2003(30 of ZdO+;. -"- r'-

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^{ -F id*Relationship of AgencyWithout prejudice to the other provisions ofthis Act, the relationship among the direct-level marketing entity, direct seller, distributorand consumer or customer shall be that ofamong the principal, agent, sub-agent and thirdparties, respectively, under the provisions ofthe Indian Contract Act, 1872 (Central Act IXof l872) and their rights, duties and liabilitiesshall be fixed accordingly.

Penalties l. Penalty for contravention of the provisionsrelating to registration and enrollment.. Penalty for violation of conditions specified

under this Act. Penalty for contravention of any otherProvisions.. Offences by companies.

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Cognizance of OffencesNotwithstanding anything contained in the Code ofCriminal Procedure, 1973 (Central Act 2 of 1974) acourt of the Judicial Magistrate of the First Classhaving jurisdiction over the area concerned shall havejurisdiction to try all offences under this Act and toimpose the fine provided for such offences.No Court shall take cognizance of any offencepunishable under this Act, except on a report inwriting of facts constituting such offence, made bythe Controller or a District Officer of the Authorityauthorised by him.

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Department of Industries & CommerceGovernment of Kerala

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Documents

Proposed Draft Bill fo MLM in Kerala - June 2013