Can shareholders or SSM force an audit-exempt company to be audited?
Yes. An otherwise eligible company must audit if it receives written notice, no later than one month before its financial year ends, from members holding at least 5% of shares, at least 5% of voting members, or from the Registrar directing an audit.
Paragraph 14 of Practice Directive 10/2024 overrides the exemption in three situations. The company must audit its accounts if, during a financial year but not later than one month before that year ends, it receives a written notice requiring an audit from:
- members eligible to vote holding in aggregate at least 5% of the issued shares (of the company or of any class of shares);
- at least 5% of the members eligible to vote (counted by number of members, not shares); or
- the Registrar, who directs the company to have its accounts audited.
What this means for owners
- Minority shareholders have a real lever. A company with several investors should not assume exemption is safe without agreement.
- A year-end of 31 December means notice must arrive by about 30 November.
- Directors should check for notices before relying on exemption and keep a record that none was received.
After a notice
- The company needs to appoint an auditor in time to audit that year's accounts (see the appointment questions).
- Exemption may be available again in later years if no notice arrives and criteria are still met.
The text does not describe a prescribed form for the notice, only that it be written. Keep proof of delivery if you send one.
Legal basis
- SSM Practice Directive 10/2024, para 14
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 happens if a Sdn Bhd fails to appoint an auditor?The company and every director commit an offence under section 267(7). Any member can apply in writing for the Registrar to appoint an auditor under section 268. Failing to have the accounts audited can also expose directors under section 248.
- What are the consequences if a Sdn Bhd that must be audited does not have an audit?Directors can face a fine up to RM500,000 or up to one year in prison under section 248, the company and directors commit an offence under section 267(7), and SSM can appoint an auditor on a member's application. Accounts also cannot be properly circulated or lodged.
- 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.