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.
Offence. Section 267(7) says the company and every director who contravene the appointment rules commit an offence. The section states no penalty, so the general penalty in section 588 applies: for an individual, a fine of up to RM50,000, imprisonment of up to three years, or both; for a company, a fine of up to RM50,000.
Registrar can step in. Under section 268, if a private company fails to appoint an auditor, the Registrar may appoint one or more auditors on written application from any member of the company.
Board fallback. If the board fails to make the first-year or casual-vacancy appointment, members may appoint by ordinary resolution (section 267(4)(b)).
Audit duty on the directors. Section 248(2) requires financial statements to be duly audited before being sent to members. Section 248(3) provides a fine of up to RM500,000, imprisonment up to one year, or both, for a director who contravenes section 248.
Unless exempt. None of this applies if the company properly qualified for and elected audit exemption for that year.
What to do if you missed the date
- Appoint an auditor as soon as possible (board for casual vacancy or first year; otherwise members).
- Contact SSM about extension options for lodgement before the deadline passes (section 259(2) allows an extension request made before expiry).
- Take advice: late appointment can leave work such as stock counts impossible to repeat.
Legal basis
- Companies Act 2016, s.267(4)-(7)
- Companies Act 2016, s.268
- Companies Act 2016, s.248(2)-(3)
- Companies Act 2016, s.259(2)
Sources
Applies to 2026 · 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
- 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.
- 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.