MLMPF Charter of Endowment
Multi-Level Marketing Protection Foundation Charter of Endowment.
Chapter1 General Provisions
Article 1
In accordance of term 1 of article 38 in “Multi-Level Marketing Supervision Act” (hereinafter referred to as the Act) and organization regulation of “Regulations for the Establishment and Administration of the Multi-level Marketing Enterprises and Participants Protection Institute,” named “Multi-Level Marketing Protection Foundation” (hereinafter referred to as the foundation).
Article 2
In accordance of term 1 article 38, the foundation main purpose shall be conducting multi-level marketing (hereinafter referred to as MLM) enterprise and participant’s rights protection and dispute resolution.
Article 3
The foundation’s industry authority is Fair Trade Commission.
Article 4
The foundation is located at Taipei City in Taiwan (R.O.C); depending on the demand of the foundation operation, as well as the approval of industry authority, the foundation shall establish branch office at appropriate location.
Article 5
Establishment of the foundation, industry authority specified MLM enterprises to provide cash contributions.
The preceding contribution amount is NTD $24 million dollars; NTD $10 million dollars of the total amount shall not be exercised.
The amount of contribution by the donor could be accounted towards the protection fund contribution and annual fee indicated by the regulation.
Protection fund shall only be used towards compensation, lawsuit assistant, and first year operation. Foundation operations shall be supported by annual fee.
Article 6
The sources of the foundation’s revenue are as follows:
1. Endowed property.
2. Protection fund contributions or annual fees collected from the MLM enterprises and participants.
3. Interest accrued from the property and management earnings.
4. Donation of corporation or individual.
5. Other donations.
Article 7
The functions of the foundation are as follows:
1. Mediating civil disputes between MLM enterprises and participants.
2. Assisting participants to bring lawsuits to court as specified in Article 30 of the Regulations.
3. Advancing the payment to the participants and seeking recovery of the liable damages as a result of civil disputes from MLM enterprises.
4. Managing and employing of the protection fund, annual fees and accrued interest contributed by MLM enterprises and participants.
5. Enhancing MLM enterprises and participants’ awareness of MLM regulations.
6. Assisting training activities.
7. Providing information service with regard to MLM regulations.
Chapter2 Organization
Article 8
The foundation establish board of directors as highest decision making body, the responsibilities of the board of directors are as follows:
1. Fund Contribution and annual fee’s administration and management.
2. Selection of members of the mediation committee.
3. Stipulation and revision of operating regulations.
4. Establishment and administration of internal organization.
5. Development and promotion of work plans.
6. Review of annual budget and final accounting accounts.
7. Proposal of amendments to the charter for endowment.
8. Proposal of property purchases and disposal or creation of encumbrance.
9. Proposal of upper limits of advancing liable damages, litigation expenses and attorney’s fees from the protection fund.
10. Other proposals or decisions to be made according to the charter for endowment.
Article 9
The foundation shall set up board of directors of 9 members to be selected/ appointed by the industry authority as follows:
1. 2 representatives from MLM enterprises filed for report with the industry authority.
2. 2 representatives from the participants.
3. 3 or 4 specialists or scholars.
4. 1 or 2 representative(s) from the industry authority.
The No.1 to 3 of the second term board of director in the preceding article, donors shall provide list of recommendation to industry authority for selection.
The no.1 of the second term recommended board of director in preceding paragraph shall contain a representative scale of sales and business operations.
The no.2 of the second term recommended board of director in preceding paragraph shall contain a representative scale of distributors and annual income.
The no.3 of the second term recommended board of director in preceding paragraph shall possess the following qualifications:
1.Served as manager level or above in industry authority under department of multi-level marketing.
2.Served more than 5 years as professional manager for MLM enterprise.
3.Served more than 5 years as a professor in Ministry of Education recognized institutions teaching law, marketing, or multi-level marketing related fields.
4.Reputable personnel with in depth research in MLM industry that published MLM books or articles.
Board of director from the no. 1 of the second term and the no. 2 of the second term shall not serve for the same MLM enterprise.
Each director shall serve a 3-year term and may be re-selected/ re-appointed for a second term. The number of directors to serve a second term may not exceed 2/3 of the total number of directors.
If the no. 1 of the second term recommended board of director changed his or her belonged MLM enterprise, the original MLM enterprise representative shall recommend another representative to serve till the end of the original expiry date. The foundation shall notify industry authority about the recommended selection of director.
If the no. 2 of the second term recommended board of director changed his or her belonged MLM enterprise, the position of director remains. Also, if both MLM enterprise representative and MLM participant representative are from same MLM enterprise, then the MLM enterprise representative will be dismissed. Donors shall resubmit recommendation list, the re-selected board of director shall serve till the end of the original expiry date. The foundation shall notify industry authority about the recommended selection of director.
The chairperson of the board of directors shall be elected from among the directors, exclusive of the industry authority’s representative(s), with a majority vote at a meeting attended by a quorum of over 2/3 of the directors. The result shall become effective upon approval of the industry authority.
Article 10
The chairperson of the board of directors shall convene and preside over board meetings. In case the chairperson is unable to convene or preside over a meeting, he or she shall designate a director to act on his or her behalf. If the chairperson fails to or is unable to designate one, the other directors shall elect one among themselves to convene and preside over the meeting.
The board meetings shall be held at least once every three months. Ad hoc meetings may be convened when necessary.
The directors shall attend the board meetings in person. In any circumstance that the director is unable to attend in person may entrust another director with the power of attorney, which clearly indicated the scope of authorization, to attend on his or her behalf. Each director may only deputize for one director only.
Article 11
Decisions of the foundation regarding the following matters shall require the attendance of a quorum of over 2/3 of the directors as well as the consent of at least 2/3 of the attending directors:
1. Revision of the charter.
2. Stipulation and revision of organizational regulations.
3. Dissolution or revision of objectives of the foundation.
4. Property purchases and disposal or creation of encumbrance.
5. Application for loans.
6. Revision of fund custody and management.
If the revision made to the charter as specified in subparagraph 1 of the preceding paragraph involves any of the circumstances described in Article 62 or 63 of the Civil Code, the industry authority may apply to the court for necessary disposition.
The matters stated in subparagraphs 1 to 3 and 6 of paragraph 1 shall acquire the prior approval of the industry authority.
The agenda for discussion regarding the matters stated in paragraph 1 shall be provided to all the directors as well as filed with the industry authority for future reference 10 days before the meeting takes place and the industry authority may also send staff members to attend the meeting as observers.
Article 12
The foundation shall have 1 to 3 supervisors to be selected by the industry authority from scholars, specialists and impartial persons.
Each supervisor shall serve a 3-year term and may be reselected. The number of reselected supervisors serving for a new term may not exceed 2/3 of the total number of supervisors.
The supervisors may investigate the operations and finances of the foundation, inspect account books or documents, and may also request the board of directors to make reports thereon.
The supervisor may exercise his or her supervision power individually. Once discovering that the board of directors is acting in violation of the laws, charter for endowment, or operating regulations during execution of its duties, the supervisor shall immediately notify the board to cease its conduct while at the same time inform the industry authority, and provide the industry authority with a written statement of the finding facts within 3 days.
Article 13
The foundation shall establish a mediation committee to handle disputes between MLM enterprises and participants. The committee shall comprise 11 to 21 members, with one of them being the chairperson of the committee. The board of directors shall select all these members from scholars, experts and impartial persons with related professional backgrounds or practical experiences. The appointment shall acquire the prior approval of the industry authority.
Each mediation committee member shall serve a 3-year term and may be reselected upon expiration of each term.
Decisions made by the mediation committee shall require the attendance of a quorum of over 1/2 the members as well as a majority vote of the attending members.
The members of the mediation committee shall exercise their duties independently in an impartial manner.
Article 14
The person falls within any of the following categories shall not serve as foundation’s director, supervisor or mediation committee member. He or she already serving in any of these capacities shall be discharged:
1.The representative of an MLM enterprise who have been placed on the industry authority watch list.
2.Any person who has engaged in inappropriate MLM activities and indicted by a prosecuting agency or transferred to a prosecuting agency by the industry authority.
3.Any person who has received a final and unappeasable conviction for violation of the provisions of the Organized Crime Prevention Act.
4.Any person who has received a final and unappeasable conviction for committing the offence of fraud, breach of trust or misappropriation.
5.Any person who has been declared bankrupt and rights and privileges have not been reinstated.
6.Any person has no capacity or a limited capacity to make juridical acts.
7.MLM enterprise representative or participant who is no longer engaged in multi-level marketing.
8.Any MLM enterprise representative or participant who has not paid endowment for the protection fund or annual fee.
At dismissal or resignation of board of director in no. 1, 2, and 3 of the second term board of director in article 9, the foundation shall provide recommended list for industry authority’s selection of director; at dismissal or resignation of board of director in no. 4 of the second term board of director in article 9, the industry authority shall select representative to serve till end of original expiry date.
Article 15
The directors, supervisors, mediation committee members and staff members of the foundation shall recuse themselves when conflict of interests occurs in the execution of duties, but election of the chairperson of board directors and reselection of directors are excluded.
The conflict of interests stated in the preceding paragraph refers to situations when directors, supervisors, mediation committee members or staff members of the foundation gain profits or reduce loss either directly or indirectly through any act or omission in execution of their duties.
Article 16
The directors, supervisors, mediation committee members and staff members of the foundation shall not engage in the following conduct:
1.Making inquiries that transgress the laws or disclosing confidential information accessed through work.
2.Demanding, agreeing to accept or receiving bribes or unjustifiable benefits during execution of their duties or for practices that transgress their duties.
Article 17
The directors, supervisors and mediation committee members of the foundation may receive part-time fees, attendance fees and transportation expenses. The standards for payment shall be established by the foundation and implemented after reported to industry authority for approval.
The staff members of the foundation may receive salaries. The standards for payment shall be established by the foundation and implemented after reported to industry authority for approval.
Chapter3 Management of finance
Article 18
For the management of accounting matters of the foundation, the accrual principle shall be adopted as the accounting basis, and the fiscal year shall be based on a calendar year. Annual business plan and budget shall be filed to industry authority 2 months prior to the start of the year; modification shall follow the same procedure. Within 15 days at the end of each season, preparation of actual situation of current season’s annual business plan and budget shall be filed to industry authority for reference.
The foundation shall operate under industry authority’s business plan and budget.
Article 19
The foundation shall prepare operation report and financial report (audited by CPA、approved by board of director, recognized by supervisor) within 6 months of the end of the year.
Article 20
After the dissolution or revocation of the foundation for any reason, the remaining assets belonged to the industry authority.
Chapter4 Supplementary
Article 21
The foundation’s organization, personnel, funds, operation and other matter not specified by this charter of endowment shall be set by the board of director separately.
Article 22
If there are outstanding issues regarding the charter of endowment, it shall be handled in accordance with relevant laws and regulations.
Article 23
The charter of endowment has been approved by donor meeting, enacted after the declaration to industry authority for approval.
Article 24
The modification of the charter of endowment shall be determined by the board of director, enacted after the declaration to industry authority for approval.