Do I need to apply to SSM for audit exemption, and who decides?
No application or form is needed. A company that meets the criteria simply elects not to appoint an auditor. In practice the directors make and certify that choice, since a director signs the certificate lodged with the accounts, but members can still force an audit.
SSM's FAQ is clear: you need not apply for audit exemption, in the same way exempt private companies do not apply. A company is eligible if it satisfies Practice Directive 10/2024, and it elects to use the exemption.
Who decides
- The company elects. The directive does not prescribe a formal resolution wording.
- A director signs the certificate lodged with the unaudited accounts, stating that to the best of their knowledge the company is entitled to exemption under section 267(2). If that director is not primarily responsible for financial management, the name of the person who is should also be stated.
- Members holding at least 5% of shares, or 5% of voting members, or the Registrar, can later require an audit (see the question on forcing an audit).
Good practice (not stated as a legal requirement)
- Record the decision in board minutes, with the eligibility working attached.
- Tell shareholders, especially minority ones, before year-end, because their window to request an audit closes one month before the year ends.
The company can always choose to appoint an auditor instead, and SSM's FAQ says it is not prohibited from doing so.
Because the director certifies eligibility, check the numbers carefully; an incorrect certificate is the director's exposure.
Legal basis
- SSM Practice Directive 10/2024, paras 14, 19
Sources
Applies to Financial periods commencing on or after 1 January 2025 (thresholds phased 2025-2027) · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Does every Sdn Bhd in Malaysia need to be audited?Not every one, but audit is the default. Section 267(1) of the Companies Act 2016 requires a private company to appoint an auditor for each financial year, unless it qualifies for and elects the audit exemption set by SSM's Practice Directive 10/2024.
- What is audit exemption for private companies in Malaysia?Audit exemption lets an eligible private company choose not to appoint an auditor for a financial year. It rests on section 267(2) of the Companies Act 2016 and SSM Practice Directive 10/2024. The company still prepares and lodges unaudited financial statements.
- What are the audit exemption thresholds for a Sdn Bhd in 2026?For financial periods starting 1 January to 31 December 2026 (Phase 2), a private company must meet at least two of three tests: revenue up to RM2,000,000, total assets up to RM2,000,000, and no more than 20 employees. Each test covers the current and past two years.
- How do I check if my Sdn Bhd qualifies for audit exemption?Pass at least two of three tests (revenue, total assets, employees) for the current financial year and the past two, using the limits for the phase your period falls in. Also confirm you are not an excluded company type, such as a subsidiary of a public company.
- Is a dormant company exempt from audit in Malaysia?Yes, if it has been dormant since incorporation or was dormant in both the current and immediately preceding financial year. A company is dormant when it carries on no business and has no accounting transaction, ignoring payments it must legally make.