CHAPTER THREE RIGHTS AND OBLIGATIONS OF PARTICIPANTS
Before a participant takes part in the sales organization or plan of a multi-level sales enterprise, the enterprise shall inform the participant of the following particulars, and shall make no dissembling, false, or misleading presentations:
Paid-up capital and gross business volume in the preceding year, or, if the enterprise has been operating for less than one year, the cumulative business volume for the months of operation; multi-level sales structure, which shall include the contents of the attainable benefits, acquiring requirements and measuring methods from goods or services directly promoted or sold by participants as well as from goods or services promoted or sold by participants who joined the multi-level sales system posteriorly; laws and regulations relevant to multi-level sales; obligations and responsibilities of a participant; the itemized products or services for sale, prices, unit costs, uses of the product or service, place of origin or source, and other related matters; conditions, terms, and scope of warranties against defects of the goods or services; conditions of withdrawal by a participant from the organization or plan, and rights and obligations arising from the withdrawal; and such other matters as may be required by the central competent authority.
Shall make no false or misleading presentations on items listed in the preceding paragraph when a participant introduces another person to take part in the organization or plan.
A multi-level sales enterprise shall enter into a participation contract in writings with that who intends to take part in the sales organization or plan as a participant; the participation contract shall include the matters prescribed in items 2 through 8 of paragraph 1 of the preceding article.
The writings referred to in the preceding paragraph may not be in the form of an electronic document.
The content of written contract, which should be disclosed by multi-level sales enterprise to participants, in accordance with item 7, paragraph 1 of article 11, should include Articles 23-1 through 23-3 of the Act, except for those are beneficial to participants.
The method for handling a request by a participant to return goods in the event a multi-level sales enterprise rescinds or terminates the contract for breach of operational rules or plans by such participant or other reasons attributable to such participant shall be specified in the contract.
A multi-level sales enterprise shall prepare the balance sheet and income statement for its multi-level sales operations in the previous accounting year before the end of May each year and keep them in its main office.
When the capital of a multi-level sales enterprise reaches the amount specified in Paragraph 2, Article 20 of the Company Act or the total sales in the previous accounting year exceeds NT$100,000,000, the aforesaid financial statements shall require auditing and certification by a certified public accountant.
Participants may request to inspect the aforesaid financial statements of the multi-level sales enterprise to which they belong and the multi-level sales enterprise may not refuse such requests without justifiable reasons.
Multi-level sales enterprises that had already met either of the conditions set forth in Paragraph 2 before the last amendment to these Regulations took effect on September 28, 2012 shall act according to Paragraph 1 and have the financial statements kept in the main office ,audited and certified by a certified public accountant from 2013 onwards.
Multi-level sales enterprises may not recruit incapacitated persons to be participants.
A multi-level sales enterprise recruiting a person with limited capacity to be a participant shall first obtain the written consent from the legal representative of such a person and also attach the said written consent to the contract.
The written consent referred to in the preceding paragraph may not be an electronic document.
Incapacitated persons who had signed a contract with a multi-level sales enterprise before the last amendment to these Regulations took effect on September 28, 2012 may continue their multi-level sales activities until they withdraw from the said multi-level sales scheme or organization.