Does the old Practice Directive 3/2017 audit exemption still apply?
Only for financial periods that started on or before 31 December 2024. Practice Directive 10/2024 revoked PD 3/2017 and applies to financial periods commencing on or after 1 January 2025. A period's start date decides which regime applies.
The switch date. SSM's FAQ confirms that PD 3/2017 stays relevant for financial statements for periods commencing on or before 31 December 2024. PD 10/2024 applies to annual periods commencing on or after 1 January 2025, and it states that it revoked PD 3/2017.
The old tests (for reference)
- Dormant companies.
- Zero-revenue companies, with total assets within RM300,000.
- Threshold-qualified companies: revenue below RM100,000, total assets below RM300,000 and no more than five employees (all conditions to be met).
Examples from SSM's FAQ
- A calendar-year company that was exempt under the old rules through the year ended 31 December 2024 can continue in 2025 if it meets Phase 1.
- A company with a 1 October year-end that did not qualify for the year ending 30 September 2025 under the old rules (that period started in 2024) may qualify under Phase 1 for the period starting 1 October 2025.
- Another example shows a company that failed the old rules for a year starting 1 July 2024 and then failed Phase 1 because the earlier two years were too large.
Takeaway. Do not use the date of year-end. Check the date the period began.
A company's earlier audited or exempt status does not itself carry forward; eligibility is re-tested each year.
Legal basis
- SSM Practice Directive 10/2024, paras 1, 20
Sources
Applies to Financial periods commencing on or after 1 January 2025 · 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.