gplus.

to/urtsam

+919711572735

To, The Principal Secretary to Govt., Industries (B) Department, Govt. Secretariat, Thiruvanathapuram 695 001. Respected sir, Kind Attention: Mr. K S Srinivas, IAS Sub: Ref:

Date: 13th Feb 2014

Submission of our suggestions and reply comments to below referred draft bill (1) DRAFT BILL TO CONTROL THE MULTI-LEVEL MARKETING IN THE STATE, CONSTITUTED UNDER G.O.(MS) NO.3/2013/ID DATED 10.01.2013. (2) THE KERALA STATE MULTI-LEVEL MARKETING (CONTROL AND REGULATION) BILL, 2013. (3) Our earlier submission of Analytical Study report document reference # FDSA/2013-14/KL/191 dated. 16th Aug 2013, against your first draft copy prepared by Mr. K S Madhusoodanan, Addl. Law Secretary during July 2013.

On behalf of FDSA executive body, I appreciate your sincere & continuous efforts to bring in a regulation & control act for Direct Selling business in the state of Kerala. We are sure that Kerala state will stand first in India to do such regulation and help the people to participate in the modern trade practices with a security of business opportunity. With regards to the above cited subject line and reference, we would like to submit our suggestions to modification & deletion of certain clauses in the above said draft bill through an annexure #1 which is enclosed with this letter. Kindly consider our version in the draft bill to make this regulation practical, effective & purposeful to all being involved in Direct Selling.
From FDSA, we are always ready to attend with any of the information / study materials etc which may be helpful to complete your task, and we are happy to help you. Please feel free to write to us. Yours truly,

A P Reddy,
President, FDSA Mobile : 93926 72999 Email : president@fdsaindia.org Ref: FDSA/2013-14/KL/247 Page 1 of 9

fb.com/urtsam

gplus.to/urtsam

+919711572735

Annexure #1
Suggestions to draft of THE KERALA STATE MULTI-LEVEL MARKETING (CONTROL AND REGULATION) BILL,

2013 S No. Description as per draft bill Suggestion for consideration Remarks

Sec 12. Registration of Direct Sellers 1

Sub Sec (1) Every direct seller of a multilevel marketing entity shall register his or its name with the Authority and get enrolled in the roll of direct sellers kept in the Authority and obtain a certificate of such enrollment in the manner and in such form as may be prescribed. Sub Sec (2) No person or other entity, other than a distributor, shall engage in direct selling on behalf of a multi-level marketing entity unless he or it has enrolled as a direct seller under sub-section (1) Sub Sec (4) An application for enrollment as a direct seller shall, if the business is intended to be to carried application shall contain the registration number and other details of

Every multilevel marketing entity shall register the names of the direct sellers and issue identity card. Such entity shall keep a register of the direct sellers with all their personal details and file return of list of direct sellers every month to the authority.
Request to delete this clause or explain in detail about applicability

This modification will ease the process of appointing new direct sellers with every company and records to the authority. Otherwise, The Govt. is forced to have lot of man power to handle the process.

It is confusing that, as direct seller can engage in business directly. Need explanation.

Request to delete this clause

This will not help business entity. Expansion should not be controlled, but can ask information regarding such
Page 2 of 9

Ref: FDSA/2013-14/KL/247

fb.com/urtsam

gplus.to/urtsam

+919711572735

the multi-level marketing entity, true copy of the marketing contract with that entity and such other details and documents as may be prescribed out in more than one District, be made to Controller and if it is for one District alone, to the Additional Controller of the District concerned, with such fee and in such form as may be prescribed. Request to Modify this Sub Sec (5) The Authority shall, after clause conducting such enquiry as may be necessary, issue a certificate of enrollment to the applicant within fifteen days from the date of receipt of such application. Sub Sec (5) If a person has registered and enrolled as a direct seller under sub-section (3), the Authority shall issue a photo identity card to the direct seller in the prescribed form If a person has registered and enrolled as a direct seller under sub-section (3), the entity shall issue a photo identity card to the direct seller in the prescribed form

expansion. Say a monthly return with details of distributors / direct sellers would be enough

This clause is not feasible to the authorities and also delays business process.

Petty correction required

Ref: FDSA/2013-14/KL/247

Page 3 of 9

fb.com/urtsam

gplus.to/urtsam

+919711572735

S No.

Description as per draft bill

Suggestion for consideration

Remarks

Sec 13. Registration of Distributors 6 Sub Sec. (1)

Every person who is appointed or authorised as a distributor of a multilevel marketing entity by a direct seller shall, by himself or through his direct seller, with the general or special permission of such multi-level marketing entity, apply to the Additional Controller of the District concerned where the business is intended to be carried out and get registered and enrolled in the roll of distributors kept in the District Office of the Authority.

Request to reconsider and modify this clause

This creates un necessary confusion and give escape route to entity in case distributor commits any breach, as they are registered directly also. One entity with multiple levels of registration (like distributor, direct seller etc..) is impractical and confusing.

Sub Sec. (2)

No distributor shall engage in the business on behalf of a direct seller without an enrollment under subsection (1) and he shall not act on behalf of any multi-level marketing entity Sub Sec. (3) No distributor shall appoint or entrust any person to do the business on behalf of himself or a direct seller or a multi-level marketing entity

Need clarity with an illustration

No distributor shall Consider to modify appoint or entrust any as suggested. person to do the business on behalf of himself or a direct seller or a multi-level
Page 4 of 9

Ref: FDSA/2013-14/KL/247

fb.com/urtsam

gplus.to/urtsam

+919711572735

marketing entity unless such person/s is enrolled as distributor or direct seller with the entity and obtained identity card.
9

Sub Sec. (4) An application for enrollment shall be made to the Additional Controller concerned of the Authority with such fee and in such form and in such manner as may be prescribed.

10

Suggest to modify this Sub Sec. (5) A person shall not be entitled to get clause enrolled as a distributor for the same reasons as specified in subsection (6) of section 12.

Instead can ask multilevel marketing entity to pay fee according to number of direct sellers/distributors as per / along with their monthly return filling. This is giving escape route to the multilevel entity. In fact company should be responsible for their distributors.

Sub Sec. (6) On receipt of an application under sub-section (3), the Additional Controller may make such enquiry as he may deem fit, including the character of the applicant. Sub Sec. (7) If the application has been allowed and the person is enrolled as a distributor, the Additional Controller shall issue a photo identity card stating the enrollment number and such other details in such form as may be prescribed.
Ref: FDSA/2013-14/KL/247

Page 5 of 9

fb.com/urtsam

gplus.to/urtsam

+919711572735

S No.

Description as per draft bill

Suggestion for consideration

Remarks

Chapter VII Penalties

22. Penalty for contravention of the provisions relating to registration and enrollment.
11 Sub Sec (1)

Any multi-level marketing entity which contravenes the provisions of section 5 shall, on conviction, be punished with simple imprisonment which may extend to six months or with fine which may extend to one Lakh rupees or with both:

Any multi-level The Act should have marketing entity which effectual provisions contravenes the to convict the guilty. provisions of section 5 shall, on conviction, be punished with simple imprisonment which may extend to 5 years with fine which may extend upto Five Lakh rupees or with both:

12

Sub Sec. (2)

Provided that in the case of continuing contravention of the provisions of section 5, it shall be liable to be punished with a further fine which may extend to five thousand rupees for every day during which the contravention is continued after the first conviction.

Provided that in the case of continuing contravention of the provisions of section 5, it shall be liable to be punished with a further fine which may extend to one Lakh rupees for every day during which the contravention is continued after the first conviction.

13

Any direct seller who Any direct seller who contravenes contravenes the the provisions of section 12 shall, provisions of section
Sub Sec. (3)
Page 6 of 9

Ref: FDSA/2013-14/KL/247

fb.com/urtsam

gplus.to/urtsam

+919711572735

on conviction, be punished with simple imprisonment which may extend to three months or with fine which may extend to fifty thousand rupees or with both: Provided that in the case of continuing contravention of the provisions of section 11, he shall be liable to be punished with a further fine which may extend to one thousand rupees for every day during which the contravention is continued after the first conviction.

12 shall, on conviction, be punished with simple imprisonment which may extend to three years with fine which may extend to 3 Lakhs rupees or with both: Provided that in the case of continuing contravention of the provisions of section 11, he shall be liable to be punished with a further fine which may extend to one thousand rupees for every day during which the contravention is continued after the first conviction. Every distributor who contravenes the provisions of section 13 shall, on conviction, be punished with simple imprisonment which may extend to 1 year or with fine which may extend to 1 Lac rupees or with both: Provided that in the case of continuing contravention of the provisions of section 13, he shall be liable to be punished with a further fine which may extend to five hundred rupees for every day during which the contravention is continued after the first conviction.
Page 7 of 9

14

Sub Sec. (4)

Every distributor who contravenes the provisions of section 13 shall, on conviction, be punished with simple imprisonment which may extend to one month or with fine which may extend to five thousand rupees or with both:

Ref: FDSA/2013-14/KL/247

fb.com/urtsam

gplus.to/urtsam

+919711572735

S No.

Description as per draft bill

Suggestion for consideration

Remarks

Chapter VII Penalties 23. Penalty for violation of conditions specified under this Act. 15 Sub Sec. (1)

Any multi-level marketing entity which contravenes the provisions and conditions specified in section 15 shall, on conviction, be punished with simple imprisonment which may extend to three months or with fine which may extend to fifty thousand rupees or with both; Provided that in the case of continuing contravention of the provisions and conditions specified under section 15, he shall be labile to be punished with a further fine which may extend to ten thousand rupees for every day during which such contravention is continued after the first conviction.

16

Sub Sec. (2)

Any direct seller or distributor who

Ref: FDSA/2013-14/KL/247

Any multi-level marketing entity which contravenes the provisions and conditions specified in section 15 shall, on conviction, be punished with simple imprisonment which may extend to three years or with fine which may extend to five lacs rupees or with both; Provided that in the case of continuing contravention of the provisions and conditions specified under section 15, he shall be labile to be punished with a further fine which may extend to ten thousand rupees for every day during which such contravention is continued after the first conviction. Any direct seller or distributor who
Page 8 of 9

fb.com/urtsam

gplus.to/urtsam

+919711572735

contravenes the provisions of subsections (1) or (2) of section 16 shall be punishable with a fine which may extend to one thousand rupees.

contravenes the provisions of subsections (1) or (2) of section 16 shall be punishable with a fine which may extend to Ten thousand rupees. Any distributor who contravenes the provisions of subsection (3) of section 16 shall, an conviction, be punished with simple imprisonment which may extend to one year or with fine which may extend to two thousand rupees or with both; Provided that in the case of continuing contravention of the provisions of subsection (3) of section 16, he shall be liable to be punished with a further fine which may extend to five thousand rupees for every day during which such contravention is continued after the first conviction.

17

Sub Sec. (3)

Any distributor who contravenes the provisions of sub-section (3) of section 16 shall, an conviction, be punished with simple imprisonment which may extend to three months or with fine which may extend to two thousand rupees or with both; Provided that in the case of continuing contravention of the provisions of subsection (3) of section 16, he shall be liable to be punished with a further fine which may extend to five thousand rupees for every day during which such contravention is continued after the first conviction.

***
Ref: FDSA/2013-14/KL/247 Page 9 of 9

fb.com/urtsam