Direct sales networking is a service based business where DSN helps to meet the business and consumer in a remote way. It provides a platform for the business and their products in the market bridging the gap between the producers and the consumers. The mode of communication in direct sale is usually online. DSN is a convenient and effective way of doing a business where the business can minimize the miscellaneous expenses. In Nepal there were scattered provisions related to direct sales until 17th August 2017 i.e Direct Sales Networking bill was passed on Kartik 1st 2074. In present the Direct Sales is governed by Direct Sales (Management and Regulation) Act 2074. Some other acts that include provisions relating to direct sales are as follows:
- Consumer Protection Act 2018: उपभोक्ता संरक्षक ऐन, २०७५
- Competition Promotion and Market Protection Act, 2007: प्रतिस्पर्धा प्रवर्द्धन ऐन, २०६३
- Company Act, 2006: कम्पनी ऐन, २०६३
- Multi-Level Marketing (MLM) Directives, 2020 : बहु–स्तरीय नेटवर्क मार्केटिङ निर्देशिका, २०७७
- Direct Sales (Regulation and management) Act 2074 : वस्तुको प्रत्यक्ष बिक्री (व्यवस्थापन तथा नियमन गर्ने) ऐन २०७४ (Detailed provisions related to direct sales)
Some important points regarding Direct Sales are as mentioned below:
- Article 3 of the act mentions that any company wishing to be involved in the direct sales business cannot perform the act of direct sale of goods without receiving a license (इजाजतपत्र),
- Any company wishing to perform direct sales is to submit an application to the department disclosing the name of the company, Company registration form, Memorandum of Association(MoA) and Articles of Association(AoA), VAT Registration, Action plan, dividends and distribution of commission plan for the direct sale of the goods in order to receive a license.
- Cannot conduct the business based on the pyramid. Pyramid schemes are considered illegal in Nepal,
- Consumer Rights: Customers must be provided with the option of a refund or return after purchasing a product,
- Agreement to be done by the license holder and the direct seller or distributor for the selling and distribution of the goods. The seller or distributor must clearly disclose the services, benefits, commissions, or bonuses they receive from the license holder in relation to the sale or distribution of goods,
- Submission of Details Regarding Commission or Bonus before Implementation: Details related to commission or bonuses must be submitted to the department before implementation,
- The license holder must sell or distribute at least 50% of domestic products (this does not apply to products that are not produced in Nepal),
- Return of Purchased Goods: If a consumer is dissatisfied with the price, quality, quantity, or utility of a product purchased from a seller or distributor they can return the product within 30 days of purchase,
- The license holder must ensure compliance with the prevailing laws related to the insurance of the goods that are included with the direct sale or distribution,
- The department may classify the license holder’s activities related to the direct sale or distribution of goods as per the designated guidelines,
- If a license of any license holder is revoked, a new license will not be issued in the same company’s or the same operator’s name.