1.01.2009

Draft CL amendments - Article 225 (3/4) multi-level marketing

Article 225 punishes illegal business operations. A final paragraph has been added to it, to include also multi-level marketing. Penalties for setting up or leading an organization that engages in multi level marketing are of less than three years fixed-term imprisonment when circumstances are serious. When circumstances are especially serious they can range between three and seven years fixed term imprisonment.

Art. 225 does not define what MLM is. Such definition is provided by art. 2 of the State Council Regulations on Prohibiting Multi-level Marketing. (禁止传销条例). Direct selling is on the other hand regulated by the State Council Regulations on the Management of Direct Selling (直销管理条例).

Under the Regulations on Prohibiting Multi-level Marketing, those who organize or lead MLM can be punished with fines ranging between 500.000 and 2.000.000 yuan. Intermediaries can be fined between 100.000 and 500.000 yuan, and participants can be fined no more than 2000 yuan. Currently those who organize or lead MLM can be prosecuted under art. 225 par. 4 for the crime of illegal business operations.



Article 225

Whoever, in violation of State regulations, commits any of the following illegal acts in business operation and thus disrupts market order, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention and shall also, or shall only, be fined not less than one time but not more than five times the amount of illegal gains; if the circumstances are especially serious, he shall be sentenced to fixed- term imprisonment of not less than five years and shall also be fined not less than one time but not more than five times the amount of illegal gains or be sentenced to confiscation of property:

(1) without permission, dealing in goods that are designated by laws or administrative rules and regulations as goods to be dealt in or sold in a monopoly way or other goods that are restricted in trading;

(2) buying or selling import or export licenses, import or export certificates of origin or other business licenses or approval papers required by laws or administrative rules and regulations; or

(3) other illegal operations that seriously disrupt market order

[Whoever sets up or leads an organization that engages in multi-level marketing and the circumstances are serious shall be sentenced to fixed term imprisonment of not more than three years or criminal detention, and shall also be fined. If circumstances are especially serious, he shall be sentenced to fixed term imprisonment of not less than three years and no more than seven years, and shall also be fined.
......]

[Draft amendment 组织、领导实施传销行为的组织,情节严重的,处三年以下有期徒刑或者拘役,并处罚金;情节特别严重的,处三年以上七年以下有期徒刑,并处罚金。

“犯前款罪又有其他犯罪行为的,依照数罪并罚的规定处罚。

“传销行为依照法律、行政法规的规定确定]

Translation courtesy CECC













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