Powered by Blogger.

26 March 2014

MLM Act News : Draft Bill on MLM Firms Draws Flak from the Indian Direct Selling Association

Posted by Unknown  |  at  9:51 AM


Chavi Hemanth said: “Kerala Government’s recent initiative towards bringing out the legislation for direct selling industry in the state has certain impractical provisions in it which inhibit the growth of entrepreneurship in the business model of direct selling.  ‘‘Hence, we request the government to reconsider the draft and consult the industry stakeholders to assess the feasibility of the legislation.”
Significantly, the bone of contention is the section 13(3), the crux of the draft Bill, which restricts the distributors from appointing or entrusting persons below them to do the business.
This section intends to prevent the formation of pyramid model business plans, which is illegal under the PCMCB Act. However, according to IDSA, “this clause restricts the entrepreneurship opportunity provided by direct selling entities and kills the spirit of the industry”.
The IDSA comprises 18 members including Amway and Modicare. Meanwhile, Superintendent of Police J Jayanath, who was the member of the committee which prepared the Bill, took strong exception to IDSA’s allegation that the Bill kills the essence of entrepreneurship.“The Bill incorporates provisions for a free and fair conduct of MLM in Keralawithout violating the provisions of the PCMCB Act. Any registered MLM entity can recruit any number of direct sellers, who in turn can appoint any number of distributors under them.
By restricting further appointments below the distributor, the Bill only restricts the formation of a binary chain which is illegal. Then, how can one say that the Bill inhibits entrepreneurship?” he said.
Stating that direct sellers and distributors are synonyms as the business model of direct selling, IDSA has challenged certain key sections including registration of direct sellers, refusal of registration of direct selling entity and the relationship of agency “The government is trying to define the relationship between direct-level marketing entity, direct seller, distributor and consumer or customer shall be that of among the principal, agent, sub-agent and third parties, respectively. But as per the business model of direct selling, direct sellers are the independent sales consultant to an entity andhence has principal to principal relationship,” said Chavi Hemanth, adding that IDSA’s legal committee was currently working on the final draft.Countering IDSA’s view, Jayanath said registration was essential for MLM entities, direct sellers and distributors so that the government could monitor their functioning, initiate action against fraudsters and make the consumers aware of the whereabouts of the firms.
The draft Bill, prepared by the committee headed by Industries Secretary K S Sreenivas, is on public domain and suggestions can be made till 5.15 pm on February 15. : 5-Fab-2014  Source :  newindianexpress.com   www.mlmnewspaper.com  

Mayank Singh Rajawat

"Editor in Chief" of TimesofHindi.com , MLMNewspaper.com . if you want to publish your Article FREE just Email Us : Editor@MLMnewspaper.com or Contact us 07566688843 ...

Get Updates

Subscribe to our e-mail newsletter to receive updates.

Share This Post

Related posts

Send Us NEWS or Your Company Details

Name

Email *

Message *

Followers

Total Pageviews

Google+ Followers

back to top