Direct Selling/ Multi Level Marketing (MLM)/ Network Marketing Business Enrollment and Compliance Formalities in Kerala
Direct selling is the most gravitating business nowadays in India but most of the Direct Seller Company/ Entities do not have knowledge regarding how to file an application with central government and Kerala state government.
State of Kerala has issued quarterly and yearly compliances and also issues that enrolment procedure. For the clarification, Direct Selling Company, who registered in Kerala, should file an application with central and state both.
No Direct Selling Entity or such other person shall engage in a Direct Selling/Multi-Level Marketing business in the State of Kerala unless such entity or other person has enrolled with the Monitoring Authority by filing an application. The following documents shall be filed along with application:
- Certificate of Registration
- Memorandum of Association
- Brief details of direct selling scheme
- Sample of contract
- Authorized contact person and details
- Copy of GSTIN PAN and TAN
- Such other information or documents
Enrolment of a direct selling entity with the Government would be made purely on the basis of the particulars furnished by the Applicant in the prescribed Enrolment Application form.
ACTION AGAINST VIOLATIONS OF THE CENTRAL GUIDELINES
The Monitoring Authority, may, either suo moto or on the report filed by the designated officers take action against Direct Selling Entities violating the Central Guidelines with due intimation to the Department of Consumer Affairs, New Delhi. The Monitoring Authority may:—
> Issue show cause notice to those companies violating the Central Guidelines, and to companies which failed to enrol with the Monitoring Authority
> Call for information from Direct Selling Entities when it is expedient to do so
> Engage one or more persons to make an inquiry in relation to the affairs of any Direct Selling Entity
> Call upon the books of accounts, registers, certified copies of mandatory registration certificates as per the Central Guidelines
> Cancel the enrolment or black list those Direct Selling Entities violating the Central Guidelines repeatedly even after show cause notices and warnings by the Monitoring Authority
FILING OF PERIODICAL REPORTS BEFORE THE MONITORING AUTHORITY
Every Direct Selling Entity should furnish reports to the Monitoring Authority within 20 days from the end of each quarter.
Every Direct Selling Entity should furnish reports to the Monitoring Authority within 45 days from the end of each financial year.
QUARTERLY COMPLIANCE
- Total number of complaints received from customers within the State and the total numbers redressed and pending status
- Total number of complaints received from Direct Sellers within the State and the total numbers redressed and pending status
- Any other particulars
YEARLY COMPLIANCE
- Details of training imparted to the Direct Sellers
- Individual wise particulars maintained by the Direct Selling Entity in respect of their direct sellers
- Copy of GST returns
- Copy of Income Tax returns
- Any other particulars
RECORDS SHOULD BE MAINTAINED BY DIRECT SELLING ENTITIES
The Direct Selling Entities shall maintain the following documents/ records either manually or electronically at the registered office.
- Certificate of Incorporation
- MOA & AOA
- Copy of PAN & TAN
- Copy of GST
- GST Returns
- Income Tax Returns
- Copy Balance Sheet, Audit Report etc.
- Record of Customers and Direct Sellers
- Register of Direct Sellers
- Other important documents
APPLICATION OF OTHER LAWS
Any direct selling activity in violation of the Central guidelines shall be dealt appropriately by the Law Enforcement Authorities under the provisions of the appropriate Acts and rules, which may include the following:
> Violation relating to product/services to be filed before the appropriate Consumer Forum under Consumer Protection Act, 1986
> Violation relating to any activity leading to money circulation or pyramid / Ponzy schemes to be dealt with under Prize Chits and Money Circulation Scheme (Banning) Act, 1978, including criminal case under Indian Penal Code.
> Violation relating to taxation laws to be dealt with by the respective Taxation Authorities etc.
In recent times, Government is taking action against the Direct Seller Entities which do not follow the guidelines.
Kerala Direct Selling/Multilevel Marketing (MLM)/Network Marketing Consumer Grievance Guidelines
Direct Seller Entity receives complaint from member, consumer or other independent person. Entity is not aware what is the compliance regarding this complain and what is his liability for that complaint.
Government of Kerala has issued a guideline regarding complains receive from member, Consumer or other independent person.
Government has designated officers at district level to receive complaints.
Direct Selling Entity should resolve grievance within 45 days from the date of receipt of Complaint. If entity fails to resolve complain within the time limit then aggrieved person may file complaint in writing along with necessary details before the designated officer.
The designated officer shall forward such complaint to the Direct Selling Entity with a direction to redress the complaint within 10 days of its receipt and to intimate the complaint redressal report to the designated officer immediately.
If the designated officer does not receive the complaint redressal report within 15 days of its receipt by the Direct Selling Entity, he shall file non-compliance report before the Monitoring Authority.
When non-compliance report received from the designated officer against Direct Selling Entity or a Direct Seller or any other person who is part of the Network of Direct Selling/ Multi-level Marketing, is found to be genuine and true, the Monitoring Authority may take such action as the Monitoring Authority deems appropriate.
Monitoring Authority shall give a reasonable opportunity of being heard to the Direct Selling Entity before taking action, if any against such entity.
Every complaint receive against the compensation plan which is in conflict with any of the provisions of the guideline must be submitted along with a valid document published by the Direct Selling Entity and clear mentioning of the relevant provisions.
For further queries/clarification write us an e-mail divyabajpaidb@gmail.com or contact us on 8375877464
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