Can a Sdn Bhd with foreign or corporate shareholders claim audit exemption?
Yes in principle. SSM's FAQ says a private company with corporate shareholders can use the exemption if it meets the criteria. The exclusion is for foreign companies themselves (such as registered branches) and subsidiaries of public companies, not for foreign shareholders.
Corporate shareholders. SSM's FAQ states that a private company with corporate shareholders that meets the criteria can enjoy audit exemption for the relevant years. The shareholding structure does not matter as such.
Foreign shareholders. The directive excludes "a foreign company", meaning a company incorporated outside Malaysia that is registered here (such as a branch). A locally incorporated Sdn Bhd owned by foreign investors is still a private company and can qualify if it passes the tests.
Where the limit bites
- If the Sdn Bhd is a subsidiary of a public company, it cannot use the exemption.
- The directive and SSM's FAQ do not address a foreign public (for example, overseas listed) parent directly. The Act defines a "public company" as a company other than a private company, and a "company" as one incorporated in Malaysia, so an overseas parent is ordinarily a foreign company rather than a public company. Confirm with SSM or a Malaysian auditor if it matters.
- Group reporting needs, or an overseas parent's own audit requirements, may mean an audit is required in practice even if Malaysian law does not require it.
Other considerations
- Foreign-owned companies often need audited accounts for bank facilities, work-pass or licensing applications, or group consolidation. These are outside the Companies Act.
- Directors remain responsible for lodging accurate accounts.
Headcount note. Count only qualifying full-time staff. Directors and shareholders who work in the company are excluded.
Legal basis
- SSM Practice Directive 10/2024, para 12
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 the 2025 to 2027 phases for audit exemption work?Practice Directive 10/2024 raises the audit exemption limits in three steps, based on when the financial period starts: 2025, 2026, and 2027 onwards. The final limits are RM3,000,000 revenue, RM3,000,000 total assets and 30 employees, reached for periods starting from 1 January 2027.
- 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.