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.
Work through these steps for each financial year.
- Confirm the company type. It must be a private company. It cannot be a subsidiary of a public company, a foreign company, or an exempt private company lodging an EPC certificate in lieu of accounts.
- Find your phase. Look at when the financial period started (for example, a period starting 1 March 2026 is Phase 2).
- Test revenue. Current year and each of the past two years must not exceed the phase limit.
- Test total assets. Same three-year check, using the statement of financial position figures.
- Test employees. Headcount at the end of each of the three years must not exceed the limit.
- Count passes. Passing any two tests is enough. A company can fail one test entirely and still qualify.
- Document it. A director signs a certificate with the lodged accounts saying the company is entitled to the exemption, so keep a working showing the numbers.
Dormant alternative. A company dormant since incorporation, or dormant in the current and prior year, can use the dormant route instead.
A new company has fewer than three years of history; SSM's directive does not spell out how to handle that, so ask SSM or your accountant if your case is unclear.
Legal basis
- SSM Practice Directive 10/2024, paras 5, 9, 10, 12, 19
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.
- 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.