Recently, the Ministry of Commerce, Industry and Tourism of Colombia issued a regulatory decree developing the multilevel marketing law (1700 of 2013) and its purpose, which includes (i) Transparency in multilevel marketing activities; (ii) Good Faith; (iii) defense of the independent sellers; (iv) Protection of public savings; and (v) Defense of public interest.
Among the most relevant issues thereof, we underline the following:
1. Payments from multilevel companies to independent sellers shall be directly related to the sale of goods and services related to the corporate purpose of the company.
2. No payment whatsoever shall be granted merely for including new independent sellers in the multilevel marketing structure.
3. Before the execution of the contract, the multilevel marketing company shall inform to the independent seller the information related to the compensation plans. Such information shall be permanently available in the companies’ offices or its web site.
4. Additionally, multilevel marketing companies shall provide to the independent seller all documents relevant for the contract relationship, such as codes of ethics, codes of conduct, terms and conditions, or company´s policies.
5. Foreign companies developing multilevel marketing activities shall settle at least one branch office in the territory of Colombia.
6. The suspension orders issued by the Superintendence of Companies shall be performed immediately, and will be in force until the multilevel marketing company proves that facts that caused the suspension are overturned.
7. The Superintendence of Corporations is entitled to supervise local companies and branches of the foreign companies and to act against unauthorized fundraising or similar activities.
Should you have any questions or comments, please do not hesitate to contact us.