On November 30, 2018, the State Bank of Vietnam issued Circular No. 29/2018/TT-NHNN guiding the certification and management of deposits of multi-level selling enterprises. This Circular takes effect from January 18, 2019.
Accordingly, Circular No. 29/2018/TT-NHNN provides the following main contents:
1. Procedures for depositing documents of enterprises
When there is a need to deposit at a commercial bank or a foreign bank’s branch, the enterprise and the escrow bank make a deposit contract.
The deposit contract includes the following main contents: Name, address, legal representative of the enterprise; name, address, legal representative of the bank (or bank branch) receiving the deposit; deposit amount; deposit purpose; deposit interest rate; form of payment of deposit interests; use deposit money; withdrawal of deposit; settlement of escrow accounts; responsibilities of related parties and other contents in accordance with the provisions of law.
Enterprises complete documents and procedures for opening escrow accounts under the guidance of the bank receiving the deposit and depositing the deposit amount into the escrow account as prescribed in Clause 2, Article 50 of Decree No. 40/2018/ND -CP of the Government on managing business activities by multi-level method (equivalent to 5% of charter capital but not less than VND 10 billion at a commercial bank or foreign bank branch in Vietnam).
After receiving the full amount of the deposit, the escrow bank shall account the deposit into the deposit account in Vietnam dong and issue a certificate of deposit to the enterprise.
If an enterprise changes its charter capital and needs to adjust the deposit amount, the escrow bank and the enterprise shall amend or supplement the deposit contract or sign a new and real deposit contract as prescribed.
The deposit interest rate is agreed by the two parties in the deposit contract between the enterprise and the bank receiving the deposit to ensure compliance with the regulations on interest rates of Vietnam dong deposits of the State Bank of Vietnam in each period.
2. Provisions on handling escrow money
Upon receiving documents from the Ministry of Industry and Trade requesting the deduction of deposit of enterprises to handle cases prescribed in Clause 1, Article 53 of Decree No. 40/2018/ND-CP, the receiving bank shall be extracting deposits for multi-level sale participants or according to sanctioning decisions of competent agencies. Specifically:
– Multi-level selling enterprises shall terminate multi-level sale activities according to regulations but fail to fulfill their obligations related to multi-level sale activities to multi-level sale participants and make decisions and copies. legally enforceable projects of competent authorities regarding the handling of disputes between multi-level selling enterprises and multi-level sales participants relating to such obligations;
– Enterprises terminate multi-level sale activities but fail to abide by decisions on sanctioning violations in multi-level sale activities already in force by competent agencies.
It can be seen that the Circular No. 29/2018/TT-NHNN is expected to improve management efficiency for multi-level sales activities, limiting the “appearance” of multi-level sales activities, contributing to rights and benefits for consumers.