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.
SSM Practice Directive 10/2024 phases in its limits over three years. The limit that applies depends on when the financial period starts.
| Period starting | Revenue | Total assets | Employees |
|---|---|---|---|
| 1 Jan - 31 Dec 2025 (Phase 1) | RM1,000,000 | RM1,000,000 | 10 |
| 1 Jan - 31 Dec 2026 (Phase 2) | RM2,000,000 | RM2,000,000 | 20 |
| From 1 Jan 2027 (Phase 3) | RM3,000,000 | RM3,000,000 | 30 |
For 2026 (Phase 2): a company with a financial year beginning in 2026 must pass at least two of the three tests at the Phase 2 figures.
Three years, not one. Each test must be met for the current financial year and the two immediately before it. SSM's FAQ shows that the earlier years are measured against the same phase limit as the current year, not the limit that applied back then.
Limits are maximums. "Not exceeding" means a company exactly at RM2,000,000 still passes.
Check the current text. SSM notes the Phase 3 figures stay unless the Registrar reviews them, so confirm against SSM's website before relying on a figure for a specific year.
Legal basis
- SSM Practice Directive 10/2024, paras 5, 9
Sources
Applies to Financial periods commencing 1 January to 31 December 2026 · 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.
- 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.
- 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.