Direct Selling - MLM - Company Registration Guidelines

The direct selling entity shall be a separate legal person registered under the Companies Act, 2013 or Limited Liability Partnership Act, 2008.
The objects of Memorandum of Association shall specify the business model as direct selling deploying direct/single level/multilevel marketing compensation plan.
As per the requirement and the norms, the entity shall comply with all applicable statutory formalities of Central and the State governments, including but not limited to the taxation laws, trade licenses, Shops and Establishments Act, Legal Metrology Act, 2009, Consumer Protection Act, 2019, custom duty law and sector-specific laws.
The promoters of a direct selling entity shall collectively maintain a minimum net worth of INR 50,00,000, and the entity shall have a minimum paid-up capital of INR 5,00,000 at the time of application and throughout the period of operation.
The company should submit the list of products it wishes to promote and the compensation plan during registration, while existing companies may add the same in the latest version after the publication of the guidelines.
An updated set of documents should be maintained in the Company’s head office (Ready Information File) containing the following documents:
- Certificate issued by Registrar of Companies, Memorandum of Association, Articles of Association and Management and Operations Memorandum;
- Copies of Taxpayer Identification Number (TIN), Director Identification Number (DIN) of Director/s, Tax Deduction Account Number (TAN), and Permanent Account Number (PAN);
- Certificate of Goods and Service Tax Registration/s;
- Copies of all GST Returns filed with the authorities;
- Copies of IT Returns of the company filed with the authorities;
- Tax Deducted at Source (TDS) Statements of direct sellers and respective challans paid;
- Copy of the latest balance sheet, profit and loss account and reports of the auditors or directors of the applicant.
- Records of Know Your Customer (KYC) and Know Your Direct Sellers (KYDS), the formats of which should be available on the company website (password protected)