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.
Practice Directive 10/2024, paragraph 10, says dormant companies continue to be exempted from the audit requirement. SSM's announcement of the new rules repeats that dormant companies remain exempted.
Two ways to be treated as dormant
- dormant since incorporation; or
- dormant in the current financial year and the immediate past financial year.
What dormant means (paragraphs 11)
- the company does not carry on business, and
- no accounting transaction occurred in the year.
An "accounting transaction" is one whose records the company must keep under section 245(1). Transactions arising from obligations the law requires the company to pay, and the related costs of complying, are ignored. SSM's wording is narrow, so paying a statutory fee should not by itself end dormancy. Bank charges or other costs are less clear, so seek advice before relying on this.
What a dormant company still does
- prepares financial statements;
- lodges unaudited accounts, directors' report and the exemption certificate with SSM; and
- keeps statutory records.
Not exempt: a dormant public company, a subsidiary of a public company, or a foreign company, because those types are excluded.
The dormant route does not depend on the revenue, assets or employee limits.
Legal basis
- SSM Practice Directive 10/2024, paras 10-12
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 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.
- 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.