 | Govt moves to better regulate MLM companies
04 July, 2011
The commerce ministry has taken initiatives to increase accountability of business operations of multi-level marketing (MLM) companies.
The ministry has sent a letter to the Securities and Exchange Commission recently, asking for its opinion on multi level marketing act -- Direct Sales Law-2011 -- in a bid to increase accountability of MLM business.
The ministry also sought opinions from Bangladesh Bank, Institute of Chartered Accountants of Bangladesh, Institute of Chartered Secretaries of Bangladesh, Institute of Cost and Management Accountants of Bangladesh, Office of the Registrar of Joint Stock Companies and Firms, banking division of the finance ministry and the home ministry.
A draft law on the marketing strategy has already been formulated with provisions of prison, fines and cancellation of licences if the MLM companies are found engaged in 21 types of businesses.
A 17-member committee headed by Additional Commerce Secretary ATM Murtozaa Reza Chowdhury was formed in March to deal with the draft law.
In line with the draft proposal, the government will form a department, which will be known as 'Direct Sales Directorate' and a secretary will be appointed to regulate the businesses.
The MLM companies will have to be enlisted with the Registrar of Joint Stock Companies and Firms.
The secretary will have power to suspend licences of the MLM companies and also halt their business if they are caught on charges of any wrongdoing.
The MLM companies will be allowed to pursue businesses under electronic marketing, pyramid selling scheme, networking marketing, tele marketing, door-to-door sale and mail order sale.
If any company bypasses any provision of the act, they will be penalised and the board of directors of the company will face a jail sentence.
The MLM companies should not be engaged in 21 types of businesses including those of land, flat, shops, office space, insurance, leasing, cooperative, trees and lotteries.
If the licence of a company is suspended and it is found operating business or engaged in sales of products, the government will freeze the company's bank accounts as per the recommendation of the High Court.
The Bangladesh Bank early this year warned against investing in MLM companies that offer abnormal profits in a short span.
Later, the Anti Corruption Commission filed cases against several companies and the central bank stopped their operations.
Release link:http://www.thedailystar.net/newDesign/news-details.php?nid=192708
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