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.
The default rule is an annual audit. Section 267(1) of the Companies Act 2016 says a private company must appoint an auditor for every financial year, and section 248(2) says the financial statements must be duly audited before they are sent to members.
The exception is audit exemption. Section 267(2) lets the Registrar (SSM) exempt private companies on conditions it sets. Those conditions are in Practice Directive 10/2024, which applies to financial periods starting on or after 1 January 2025.
A private company can skip the audit only if it:
- meets at least two of three size tests (revenue, total assets, number of employees), or has been dormant;
- is not one of the excluded types (public companies, subsidiaries of public companies, foreign companies, and exempt private companies that lodge an EPC certificate instead of accounts); and
- actually elects to use the exemption.
Exemption is optional, not automatic. A company that qualifies may still appoint an auditor, and some owners do so because banks or investors want audited accounts.
Unaudited does not mean unfiled. Exempt companies must still prepare proper financial statements and lodge them with SSM.
If a company neither qualifies for exemption nor appoints an auditor, the directors risk offences under the Act (see the penalties question in this section).
Legal basis
- Companies Act 2016, s.248(2)
- Companies Act 2016, s.267(1)-(2)
- SSM Practice Directive 10/2024
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
- 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.
- 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.