{"id":2011,"date":"2026-04-27T03:27:23","date_gmt":"2026-04-27T03:27:23","guid":{"rendered":"https:\/\/mfmco.my\/?page_id=2011"},"modified":"2026-05-06T08:54:50","modified_gmt":"2026-05-06T08:54:50","slug":"audit-exemption-of-private-companies-in-malaysia-new-directives","status":"publish","type":"page","link":"https:\/\/mfmco.my\/index.php\/audit-exemption-of-private-companies-in-malaysia-new-directives\/","title":{"rendered":"Audit Exemption of Private Companies in Malaysia (New Directives)"},"content":{"rendered":"<p style=\"text-align: left;\">Private companies in Malaysia (Sdn. Bhd.) can be exempted from mandatory audit if they meet the new specific criteria under Practice Directive 10\/2024 from the Companies Commission of Malaysia (SSM\/CCM), effective from January 1, 2025.<\/p>\n<p style=\"text-align: left;\">Private companies meeting the new exemption requirements are <strong>not required<\/strong> to appoint an <strong>auditor <\/strong>under Section 267(2) of the Companies Act 2016, in turn these private companies are no longer required to perform audit on their financial statements.\u00a0 However, despite the exemption, companies are still required to prepare and issue their annual unaudited financial statements complete with income statement, balance sheet, statement of changes in equity, cash flow statements, directors&#8217; report and in compliance with approved accounting standards, issuance of Audit Exemption Certificate and meeting provision of the Companies Act 2016 as directed by the authorities.\u00a0 In this case, in the absence of auditor, the private companies may appoint internal qualified accountant or accounting firm with public practice license and registered with Malaysian Institute of Accountants in assuming the compliance role that was traditionally undertaken by external auditor in ensuring the financial statements are compiled and in compliance with the laws and regulation in Malaysia.<\/p>\n<p style=\"text-align: left;\"><strong>Key Audit Exemption Categories (Effective Year 2025)<\/strong><\/p>\n<p style=\"text-align: left;\">The Companies Commission of Malaysia (SSM\/CCM) categorizes audit exempted private companies into three types, and their exemption requirements are stipulated below.<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><strong>Dormant Companies:<\/strong>\u00a0Companies that have been inactive since incorporation or were inactive throughout the current and immediate past financial year.<\/li>\n<li><strong>Zero-Revenue Companies: <\/strong>Companies with no revenue during the current and immediate past two \u00a0\u00a0financial years, with total assets of RM300,000 or less.<\/li>\n<li><strong>Threshold-Qualified Companies:<\/strong>\u00a0Companies that meet at least two of the following criteria for the current and past two financial years:\n<ul>\n<li>Annual revenue\u00a0of RM3 million or less.<\/li>\n<li>Total assets\u00a0of RM3 million or less.<\/li>\n<li>Employees of 30 or less.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>With regards to the <strong>Threshold-Qualified Companies<\/strong>, the new audit exemption requirements are implemented in phases over time as outlines in the below paragraphs.<\/p>\n<ul style=\"text-align: left;\">\n<li style=\"list-style-type: none;\"><strong style=\"font-size: 1rem;\">Phased Implementation (Year 2025 to Year 2027) for Threshold &#8211; Qualified Companies<\/strong><\/li>\n<\/ul>\n<p style=\"text-align: left;\">The new thresholds are being phased in to ease the transition by meeting at least two of the following criteria on annual basis:<\/p>\n<ul style=\"text-align: left;\">\n<li style=\"list-style-type: none;\">\n<ul>\n<li><strong>Year 2025:<\/strong> Revenue\/Assets\u00a0of RM1 Million or less, Employees of 10 or less.<\/li>\n<li><strong>Year 2026:<\/strong> Revenue\/Assets RM2 Million or less, Employees of 20 or less.<\/li>\n<li><strong>Year 2027:<\/strong> Revenue\/Assets RM3 Million or less, Employees of 30 or less.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: left;\"><strong>Exceptions to Exemption<\/strong><\/p>\n<ul style=\"text-align: left;\">\n<li style=\"list-style-type: none;\">\n<ul>\n<li><strong>Shareholder Request:<\/strong>\u00a0Shareholders holding at least 5% of total shares can request an audit, which the company must comply with.<\/li>\n<li><strong>SSM Demand:<\/strong>\u00a0The SSM may issue a written notice requiring a company to audit its accounts.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: left;\"><strong>Important Reminders<\/strong><\/p>\n<ul style=\"text-align: left;\">\n<li style=\"list-style-type: none;\">\n<ul>\n<li><strong>Financial Reporting:<\/strong> Even if exempt from audit, companies must still prepare and lodge unaudited financial statements based on approved accounting standards and companies act 2016, and tax returns.<\/li>\n<li><strong>Directors<\/strong> responsible for financial management of the company are required to issue a <strong>Certificate of Audit Exemption.<\/strong>\u00a0 It is a declaration by the directors that the company meet all requirement for audit exemption, and the unaudited financial statements are prepared in accordance with approved accounting standards and the Companies Act 2016.<\/li>\n<li><strong>Directors<\/strong> are required to issue Directors&#8217; Report with all the necessary statutory declaration on the unaudited financial statements in compliance with the Fifth Schedule of the Companies Act 2016.<\/li>\n<li><strong>Dormant Company Eligibility:<\/strong>\u00a0Dormant companies must be truly inactive to qualify, meaning they have not had any accounting transactions.<\/li>\n<li><strong>Annual Return:<\/strong>\u00a0An annual return submitted to the SSM for an exempted company <strong>should not show<\/strong> the name or details of an auditor.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: left;\">We, Megat Faizal Musa &amp; Co., a firm of Chartered Accountants and a Member Firm of Malaysian Institute of Accountants, specializes in Accounting, Business Advisory and Secretarial Services.\u00a0 Contact us at <em>customerservice@mfmco.my<\/em> for more information.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Private companies in Malaysia (Sdn. Bhd.) can be exempted from mandatory audit if they meet the new specific criteria under Practice Directive 10\/2024 from the Companies Commission of Malaysia (SSM\/CCM), effective from January 1, 2025. Private companies meeting the new exemption requirements are not required to appoint an auditor under Section 267(2) of the Companies &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/mfmco.my\/index.php\/audit-exemption-of-private-companies-in-malaysia-new-directives\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Audit Exemption of Private Companies in Malaysia (New Directives)&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":1910,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"footnotes":""},"class_list":["post-2011","page","type-page","status-publish","has-post-thumbnail","hentry"],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/pages\/2011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/comments?post=2011"}],"version-history":[{"count":39,"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/pages\/2011\/revisions"}],"predecessor-version":[{"id":2052,"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/pages\/2011\/revisions\/2052"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/media\/1910"}],"wp:attachment":[{"href":"https:\/\/mfmco.my\/index.php\/wp-json\/wp\/v2\/media?parent=2011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}