DIRECT SALES AND ANTI-PYRAMID SCHEME ACT 1993

Direct Sales and Anti-Pyramid Scheme LAWS OF MALAYSIA Reprint Act 500 Direct sales and anti-pyramid scheme act 1993 As at 1 March 2013 Published by The Commissioner of Law revision, Malaysia Under the Authority of the Revision of Laws Act 1968 2013 1 2 Act 500 Laws of Malaysia direct sales and anti-pyramid scheme act 1993 Date of Royal Assent ... … … … 22 January 1993 Date of publication in the Gazette … … 4 February 1993 Latest amendment made by Act A1379 which came into operation on ... … … 1 March 2011 … Previous Reprints First Reprint ... ... ... 2002 Second Reprint ... ... ... 2006 Direct Sales and Anti-Pyramid Scheme 3 LAWS OF MALAYSIA Act 500 DIRECT SALES AND ANTI-PYRAMID SCHEME ACT 1993 ARRANGEMENT OF SECTIONS Part I PRELIMINARY Section 1. Short title, commencement and application 3. Controller, Deputy Controllers, etc. 2. Interpretation Part II REQUIREMENT FOR A LICENCE TO CARRY ON DIRECT SALES BUSINESS 4. Direct sales business to be carried on only under licence 6. Grant or refusal of licence 5. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Submission of application for licence (Deleted) Revocation of licence Imposition of restrictions in lieu of revocation of licence Power to impose new conditions and to vary or revoke conditions Notice of revocation of licence, imposition of restrictions, or variation, revocation or imposition of new conditions Surrender of licence Prohibition on the carrying on of direct sales business upon revocation, expiry of duration, or surrender of licence Authorization to carry on activities after revocation Amendment or alteration of constituent documents of licensee Appeal against Controller’s decision 4 Laws of Malaysia Act 500 Part III DOOR-TO-DOOR SALES AND, MAIL ORDER SALES AND SALES THROUGH ELECTRONIC TRANSACTIONS Section 17. Calling at any premises for the purpose of negotiating door-to-door sales 19. Mail order sales 18. 19a. 20. 21. 22. Persons negotiating door-to-door sales to produce identification card and authority card Sales through electronic transaction Contents of advertisement in mail order sales Offence to furnish false information in advertisement Goods to be available for inspection Part IV DIRECT SALES CONTRACTS 23. 24. Requirements of direct sales contracts Contents of direct sales contracts Part V COOLING-OFF PERIOD AND RESCISSION 25. 26. 27. Goods or services not to be delivered or performed during cooling-off period Rescission of contract Effect of rescission Part Va PROHIBITION OF PYRAMID SCHEME 27a. 27b. Interpretation in relation to this Part Unlawful to promote or conduct pyramid scheme Part VI ENFORCEMENT 28. 29. Declaration of office Search and seizure with warrant Direct Sales and Anti-Pyramid Scheme 5 Section 29a. Search and seizure without warrant 29b. Assistant Controller may take other persons 29c. Access to computerized data 29d. List of things seized 30. Powers of arrest 31. Obstruction of officers 32. Warrant admissible notwithstanding defects, etc. 33. Powers of investigation 33a. Power to require attendance of person acquainted with case 33b. Examination of person acquainted with case 33c. Admissibility of statement in evidence 34. Prosecution 35. Forfeiture of property, etc. 36. No costs or damages arising from seizure to be recoverable 36a. Cost of holding property, etc., seized Part VII MISCELLANEOUS 37. Certain contractual terms prohibited 38. Offences by body corporate, etc. 39. General penalty 40. Compounding of offences 41. Jurisdiction to try offences 42. Power to exempt 43. Protection of Controller, Deputy Controllers, Assistant Controllers and other officers 43a. Protection of informers 44. Regulations 45. Amendment of Schedule Schedule 6 Laws of Malaysia Act 500 Direct Sales and Anti-Pyramid Scheme 7 LAWS OF MALAYSIA Act 500 DIRECT SALES AND ANTI-PYRAMID SCHEME ACT 1993 An Act to provide for the licensing of persons carrying on direct sales business, for the regulation of direct selling, for prohibiting pyramid scheme or arrangement, chain distribution scheme or arrangement, or any similar scheme or arrangement, and for other matters connected therewith. [1 June 1993, P.U. (B) 152/1993] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: Part I PRELIMINARY Short title, commencement and application 1. (1) This Act may be cited as the *Direct Sales and AntiPyramid Scheme Act 1993 and shall come into force on such date as the Minister may, by notification in the Gazette, appoint and different dates may be appointed for the coming into force of different provisions of this Act. (2) This Act shall apply throughout Malaysia and only in respect of— (a) negotiations carried on after the coming into force of this Act, leading to the formation of direct sales contracts; and *NOTE—see sections 4 and 5 of the Direct Sales (Amendment) Act 2010 [Act A1379]. 8 Laws of Malaysia Act 500 (b) direct sales contracts entered into after the coming into force of this Act, notwithstanding that negotiations leading to the formation of the contract may have taken place before that date. (3) This Act shall not apply— (a) where the purchaser or the prospective purchaser is a body corporate; (b) to any contract of insurance and reinsurance issued by an insurer registered under the *Insurance Act 1963 [Act 89]; and (c) to any contract of takaful and re-takaful issued by a takaful operator registered under the Takaful Act 1984 [Act 312]. (4) The provisions of this Act shall be without prejudice to the Hire-Purchase Act 1967 [Act 212], the Sale of Goods Act 1957 [Act 382], the Contracts Act 1950 [Act 136] and the Companies Act 1965 [Act 125], and where there is any conflict between the provisions of this Act and the provisions of any of such Acts the provisions of this Act shall prevail. Interpretation 2. In this Act, unless the context otherwise requires— “advertisement” includes every form of advertising (whether or not accompanied by or in association with spoken or written words or other writing or sounds and whether or not contained or issued in a publication) by the display of notices or by means of catalogues, price lists, labels, cards or other documents or materials or by the exhibition of cinematograph films or of pictures or photographs, or by means of radio or television, or in any other way; “Controller”, “Deputy Controller” and “Assistant Controller” mean respectively the Controller of Direct Sales, a Deputy Controller of Direct Sales and an Assistant Controller of Direct Sales appointed under section 3; *NOTE—This Act has been repealed by Insurance Act 1996 [Act 553]-see subsection 214(1) of Act 553. Direct Sales and Anti-Pyramid Scheme 9 “cooling-off period” means the period of ten working days commencing on the day after the date of the making of a direct sale contract; “direct sale” means a door-to-door sale, a mail order sale or a sale through electronic transaction within the meaning of this Act; “door-to-door sale” means the sale of goods or services conducted in the following manner: (a) a person or any person authorized by him— (i) goes from place to place not being a fixed place of business; or (ii) makes telephone calls, seeking out persons who may be prepared to enter, as purchasers, into contracts for the sale of goods or services; and (b) that first-mentioned person or some other person then or subsequently enters into negotiations with those prospective purchasers with a view to the making of such contracts; “electronic” means the technology of utilizing electrical, optical, magnetic, electromagnetic, biometric, photonic or other similar technology; “fixed place of business” means— (a) in relation to the sale of goods, the place at which the vendor normally carries on a business or at which goods of the description to which the sale relates, or goods of a similar description, are normally offered or exposed for sale in the course of a business carried on at that place; (b) in relation to the sale of services, the place at which the vendor carries on business; “goods” means every kind of movable property other than choses in action, negotiable instruments, shares, debentures and money; 10 Laws of Malaysia Act 500 “mail order sale” means the sale of goods or services which a person conducts, either by himself or through any person authorized by him, by receiving an offer for a sale contract by mail or any other means of mailing including through electronic means; “Minister” means the Minister responsible for domestic trade and consumer affairs; “prescribed” means prescribed by the regulations; “property” means movable property or immovable property of every description, whether tangible or intangible and includes an interest in any such movable property or immovable property, choses-in-action, negotiable instrument and money; “purchaser” means the person to whom goods or services are supplied or are to be supplied under a contract and, if the rights of that person are transferred by operation of law, includes the person for the time being entitled to those rights; “sales through electronic transaction” means sales of goods or services through electronic means by using marketing networks with the purpose of getting commission, bonus or any other economic advantage; “services” includes rights or benefits of any kind except the supply of goods and the performance of work under a contract of service, and a reference to the word “services” in this Act shall relate to direct sales and pyramid scheme; “the regulations” means the regulations made under this Act; “vendor” means the person who supplies or agrees to supply goods or services under a contract and, if the rights of that person are transferred by operation of law, includes the person for the time being entitled to those rights. Controller, Deputy Controllers, etc. 3. (1) The Minister may appoint, from amongst public officers, a Controller of Direct Sales and such number of Deputy Controllers of Direct Sales, Assistant Controllers of Direct Sales and other officers as may be necessary for the purposes of this Act. Direct Sales and Anti-Pyramid Scheme 11 (2) The Controller shall, subject to the general direction and control of the Minister, perform the duties imposed and exercise the rights and powers conferred upon him under this Act and the regulations. (3) The Deputy Controllers, Assistant Controllers and other officers appointed under subsection (1) shall be under the direction and control of the Controller. (4) Except as provided in subsection (5), a Deputy Controller may perform all the duties imposed and exercise all the rights and powers conferred upon the Controller under this Act. (5) The duties to be performed and the rights and powers to be exercised by the Controller under sections 6, 8, 9, 10, 11, 13 and 14 shall be performed and exercised by the Controller personally. (6) The Controller or Deputy Controller may perform all the duties imposed and exercise all the powers conferred upon an Assistant Controller under this Act or the regulations. (7) All officers appointed under this section shall be deemed to be public servants within the meaning of the Penal Code [Act 574]. Part II REQUIREMENT FOR A LICENCE TO CARRY ON DIRECT SALES BUSINESS Direct sales business to be carried on only under licence 4. (1) Subject to sections 14 and 42, no person shall carry on any direct sales business unless it is a company incorporated under the Companies Act 1965 and holds a valid licence granted under section 6. (2) Any person who contravenes subsection (1) shall be guilty of an offence and shall, on conviction, be liable— (a) if such person is a body corporate, partnership or society, to a fine not exceeding one millio