Supervisory Regulations Governing Multi-Level Sales of 1992	Laws & Regulations

Article 1

These Regulations are enacted pursuant to Paragraph 2, Article 23 of the Fair
Trade Law.

Article 2

The provisions of these Regulations shall apply to the control of multi-level
sales.

The term "multi-level sales enterprise" as referred to in these Regulation shall
mean an enterprise which makes its operational projects or its rules, and plans
its overall sales activities in respect of multi-level sales.

The term 'participant' as referred to in this Regulations, shall mean a
person who takes part in the organization or plan of a multi-level sales enterprise
and sells or promotes the sale of commodities or services, and introduces other
persons to join the aforesaid activities.

Article 3

Prior to commencing its business or operation, a multi-level sales enterprise
shall file a written report setting forth the following particulars for recordation
with the central competent authority:

1. sales organization or plan;
2. operation project or guidelines, providing, among others, calculation formula
   of participants' commissions, grants and other economic gains;
3. the commencement date business or operation;
4. principal office;
5. terms and conditions providing rights and obligations of participants and
   general conditions of sales; and
   
6. provisions regarding warranties with respect to the commodities or services
   to be sold.
   

In the event of any change in the contents of the aforesaid report, the enterprise
shall file another report for such change with the authority prior to the implementation
thereof.

Any multi-level sales enterprise which commences its business or operation of
multi-level sales before the promulgation of these Regulations shall file the
aforesaid report for recording within two (2) months after the promulgation
of these Regulations.

If deemed necessary, the central competent authority may notify a multi- level
sales enterprise to supplement the report as filed in accordance with the first
paragraph within a specified time limit.

Article 4

Before a participant takes part in the sales organization or play of a multi-level
sales enterprise, the enterprise shall inform the participant of the following
particulars with no false, concealed, or misleading statements:

1. capital amount;
2. sales organization or plan;
3. operation rules and trading guide;
4. obligations and liabilities of a participant;
5. contents of gains paid to a participant for directly selling or promoting
   the sales of commodities or services, and, if a participant may be paid gains
   for selling or promoting the sales of commodities or services by another participant
   who is introduced to join the plan or organization by the former participant,
   the contents and conditions of such gains;
6. particulars in connection with the types, functions, qualities, and usages
   of commodities or services;
7. terms, conditions and limitation of the obligations for warranties in commodities
   or services;
8. terms and conditions of withdrawal of a participant from and organization
   or plan, and rights and obligations arising out of the withdrawal; and
   
9. other particulars as designated by the central competent authority.
   

Before a participant takes part in the sales organization or play of multi-
level sales enterprise, the enterprise shall enter into a written participating
contract with the participant, incorporating the provisions as prescribed in
Items 2 through 9 of the first paragraph of this Article.

To evidence the performance of the non-disclosure duty of the first paragraph,
the multi-level enterprise shall keep a statement signed by each participant
or other types of proof documenting such disclosure.

The provisions as prescribed in paragraphs 1 and 3 of this Article shall apply
to a participant introducing a third person to participate.

Article 5

The contents of Item 8, Paragraph 1 of the preceding Article shall include
the following particulars:

1. A participant may give written notice to a multi-level sales enterprise
   to rescind a contract within fourteen (14) days after the execution of the
   contract.
   
2. Within thirty (30) days after the cancellation of the contract becomes effective,
   the multi-level sales enterprise shall, upon the participant's request,
   retrieve or accept the participant's delivery of the commodities, and return
   the purchase price at the time of cancellation of the contract and other expenses
   paid by the participant at the time of participation.
   
3. In returning the payments made by the participant under Paragraph 2 of this
   Article, the multi-level sales enterprise may deduct the value of the commodities
   destroyed or extinguished due to reasons attributable to the participant and
   the grant and/or the amount paid to the participant for such dealing, as well
   as the shipping cost if the enterprise retrieves the commodities.
   
4. After expiration of the period for entitlement to rescind a contract as
   set forth in Paragraph 1 of this Article, the participant may terminate the
   contract in writing and withdraw from the multi-level sales plan or organization
   at any time.
   
5. After termination of a contract, the multi-level sales enterprise shall
   buy back commodities possessed by the participant concerned at the price of
   ninety percent (90%) of the original purchase price paid by the participant,
   provided that the enterprise may deduct the amount paid to the participant
   for such dealing and the diminished value of the commodities if the value
   of the retrieved commodities is diminished.
   
6. If the participant exercises its rights to cancel or terminate a contract
   under Paragraph 1 or 4, the multi-level sales enterprise shall not claim from
   the participant any breach penalty or compensation for damages suffered by
   the enterprise in connection with the cancellation or termination of the contract.
   

Article 6

A multi-level sales enterprise shall prepare and keep, in its principal office,
written information about monthly records of the development of the enterprise
within the territory of the Chinese Taipei for the examination by the central
competent authority, including the overall organizational system of the enterprise
and the organizational system of each of its levels, the number of participants,
categories of commodities and services sold or dealt, quantities, commissions,
grants or other economic gains and principal distribution areas.

The aforesaid records shall be kept for five year.

The written information may be restored by electronic data media if the central
competent authority so agrees.

The central competent authority may dispatch officials to check the written
information from time to time, which the enterprise shall not impede, refuse
or evade.

Article 7

A multi-level sales enterprise shall not conduct any of the following activities:

1. Require a participant to pay any fee exceeding the cost in the name of training,
   seminars, social activities or meetings, or in any others.
   
2. Require a participant to pay or undertake any security deposit, breach penalty,
   or other responsibilities which are obviously inappropriate.
   
3. Require a participant to purchase commodities in a quantity which are clearly
   impossible to be sold out in a short period by an average person, unless it
   is set forth in a contract that the price shall be paid after the commodities
   are sold.
   
4. Withhold gains payable to a participant after the participant withdraws
   from the enterprise in accordance with the relevant regulations.
   
5. Set forth in a contract that a participant shall be given more gains only
   after the participant pays a massive amount of training fees or other costs.
   
6. Require, in other improper manners, a participant to undertake any responsibility
   which is clearly unfair. The above-listed provisions of this Article shall
   apply mutatis mutandis to a participant introducing a third person to participate.
   

Article 8

These Regulations shall come into force as of the date of promulgation.