The Ministry of Commerce (“MOC”), via notification no. 46/2018 dated 18 September 2018, (“Notification”) restricted the business model involving multi-level marketing (“MLM”) with effect from the date of the Notification.
MLM, also primarily referred to as pyramid selling or network marketing, has become commonplace in Myanmar in recent years. Pursuant to an extensive probe in MLM business activities carried out in Myanmar, the MOC issued a statement that legal action shall be initiated against entities involved with MLM business activities, in accordance with the provisions of the Essential Goods and Services Law.
For any violations of the notification, the law provides for penal action entailing a minimum of six months up to a maximum of three years in jail and/or a fine not exceeding Myanmar Kyats 500,000.
It is our understanding that the Notification is a result of an audit by the authorities on several MLM companies, pursuant to several complaints filed by various activists across regions and states in Myanmar. In the absence of any specific law governing the MLM business model, restrictive actions have been linked with the Essential Good and Services Law.
In view of the prevalence of the MLM business model in various states and regions in Myanmar, it will be interesting to keep a close watch in the coming days to see if any further regulations are promulgated in this sector. We see this as an important step by the Government authorities to safeguard the interests of the lower-income bracket community.
Through our office in Yangon, Duane Morris & Selvam advises corporations on investment, business and regulatory processes in Myanmar. For further information, please contact Mr Krishna Ramachandra (kramachandra@duanemorrisselvam.com), Ms Babita Ambekar (bambekar@duanemorrisselvam.com), Mr Priyank Srivastava (psrivastava@duanemorrisselvam.com), or Mr CN Beilo (CBLo@selvamandpartners.com) or visit www.duanemorrisselvam.com. Duane Morris & Selvam is recognized as a leading law firm for Myanmar related Corporate, M&A and Projects (including Energy) work – The Legal 500 (2017 & 2018).
