Your Sdn Bhd can be exempted from a statutory audit if it fits one of three SSM categories: a dormant company, a zero-revenue company, or a threshold-qualified company. For a financial year starting in 2026, the threshold route means meeting at least two of three limits — annual revenue and total assets each up to RM2 million, and no more than 20 employees — in the current financial year and the two immediately preceding financial years.
Key takeaways
- Audit exemption for a Malaysian private company is governed by SSM's Practice Directive 10/2024, effective for financial years beginning on or after 1 January 2025; it replaced the far narrower PD 3/2017 regime.
- Three routes qualify a Sdn Bhd: dormant, zero-revenue (no revenue and total assets under RM300,000), or threshold-qualified.
- The threshold limits phase up over three years: RM1 million (2025), RM2 million (2026) and RM3 million (2027) for both revenue and total assets, with employee caps of 10, 20 and 30.
- You must meet at least two of the three limits in the current financial year and in each of the two immediately preceding financial years.
- Exemption removes your auditor, not your paperwork: you still lodge unaudited financial statements and your annual return with SSM, and members holding 5% can still demand an audit.
What is audit exemption, and what changed in 2025?
Audit exemption lets a qualifying private company (Sdn Bhd) lodge unaudited financial statements instead of paying for a statutory audit. The current rules come from SSM's Practice Directive 10/2024, which took effect for financial years beginning on or after 1 January 2025 and revoked the older, much stricter PD 3/2017.
The Registrar's power to exempt certain private companies from audit sits in Section 267 of the Companies Act 2016, and the qualifying criteria are set out in the practice directive issued under it. The 2024 change matters because it widened the door: under the old regime almost no active trading company could skip an audit, whereas Grant Thornton Malaysia and Rodl & Partner both confirm the new criteria are aimed squarely at small and dormant private companies.
Practice Directive 10/2024 widened audit exemption so that ordinary small trading companies — not just dormant shells — can now qualify. That is the single biggest shift for Malaysian SMEs since the Companies Act 2016 came into force.
Under PD 10/2024, a private company qualifies for audit exemption where it meets “at least two of the following three criteria in the current financial year and in each of the two preceding financial years” — Grant Thornton Malaysia.
What are the audit exemption thresholds for 2025, 2026 and 2027?
A threshold-qualified Sdn Bhd must meet at least two of three limits: annual revenue, total assets and number of employees. Those limits rise in three phases — RM1 million and 10 employees for financial years starting in 2025, RM2 million and 20 employees for 2026, and RM3 million and 30 employees from 2027 onwards.
| Phase | Financial year begins on/after | Max annual revenue | Max total assets | Max employees |
|---|---|---|---|---|
| Phase 1 | 1 January 2025 | RM1,000,000 | RM1,000,000 | 10 |
| Phase 2 | 1 January 2026 | RM2,000,000 | RM2,000,000 | 20 |
| Phase 3 | 1 January 2027 | RM3,000,000 | RM3,000,000 | 30 |
The phased figures above are confirmed by DataTracks and KTP, and they are a "two of three" test rather than "all three": a company that breaches only one limit still qualifies. The catch is the look-back. You must satisfy the test not just this year but in each of the two immediately preceding financial years, and because the thresholds step up annually, each of those years is measured against the limit that applies to it.
A threshold-qualified Sdn Bhd is measured over three financial years, so a company scaling quickly should check each year separately rather than assuming the current-year limit applies to the past. For example, a company with a 31 December 2026 financial year-end that recorded revenue of RM900,000 and RM1.1 million of total assets with eight staff across 2024, 2025 and 2026 comfortably meets two of the three limits in every year, and so is exempt for 2026.
The dormant and zero-revenue routes
Two other categories skip the size thresholds entirely. A dormant company — one with no accounting transactions since incorporation, or throughout the current and immediately preceding financial year — is exempt. So is a zero-revenue company: one that earned no revenue across the current and two preceding financial years and whose total assets stayed under RM300,000 in those years.
These two routes exist for companies that are technically registered but barely trading, and Fareez Shah & Partners sets out both category definitions in full. A dormant Sdn Bhd is still a live company on the register, which is why it must keep a named company secretary and continue filing even while it qualifies for audit exemption.
A zero-revenue company differs from a dormant one in that it may hold assets and incur expenses, but it records no revenue and stays under the RM300,000 total-asset ceiling. Both routes remove the auditor, but neither removes the annual return or the unaudited financial statements.
Which companies can never claim audit exemption?
Some private companies are shut out regardless of size. Audit exemption does not apply to public companies (including listed ones), private companies that are subsidiaries of a public company, foreign companies registered in Malaysia, or exempt private companies that have lodged a certificate under Section 260 of the Companies Act 2016.
This exclusion list is confirmed by both Grant Thornton and Rodl & Partner. The practical takeaway is that group structure matters as much as size: a small, quiet Sdn Bhd that happens to be a subsidiary of a public company must be audited even if its own numbers sit far below the phase thresholds.
If you are exempt, what do you still have to file?
Audit exemption removes the auditor, not the filing. A qualifying Sdn Bhd must still keep proper accounting records, prepare true-and-fair financial statements approved by the board, circulate them to members, and lodge the unaudited statements with SSM within 30 days of circulation through the MBRS portal, alongside its annual return.
Those obligations sit in Sections 244, 245 and 259 of the Companies Act 2016, as Grant Thornton notes, and the unaudited statements are filed digitally via the Malaysian Business Reporting System (MBRS), per DataTracks. On top of the accounts, KTP confirms an exempt company lodges a directors' report, a statement by directors, a statutory declaration, and a certificate confirming it qualifies for the exemption.
A qualifying company can also be pulled back into an audit against its wishes: Amaze Advisory notes that members holding at least 5% of the shares — or 5% of the total number of members — can require one in writing, and the Registrar retains power to direct an audit. In other words, audit exemption is an option a qualifying company may take, not a permanent status it is handed.
Where a company secretary fits in
Audit exemption is a company-secretary matter as much as an accounting one, because your company secretary is who lodges the unaudited financial statements and the annual return with SSM. PT Corporate Services prepares and files those statutory submissions through MBRS and keeps the statutory registers that support the exemption.
Whether your company actually qualifies is an accounting judgement, worked out from your revenue, assets and headcount with your accountant. Once that is settled, the lodgement is a secretarial job: the directors' statement, the statutory declaration, the annual return under Section 68, and the unaudited financial statements all have to reach SSM correctly and on time. PT Corporate Services handles that filing and the SSM filings around it so nothing is missed.
If you are unsure where your Sdn Bhd sits, start with our Companies Act 2016 compliance guide and our wider guide to company secretarial compliance, then talk to us about the filing itself.
Frequently asked questions
Do I still need a company secretary if my company is audit-exempt?
Yes. Audit exemption removes the auditor, not the company secretary. Every Sdn Bhd must keep a named company secretary who lodges the unaudited financial statements and the annual return with SSM, whether or not the accounts are audited.
My Sdn Bhd's financial year starts in 2026 — which threshold applies?
Phase 2 applies: annual revenue and total assets of up to RM2 million each, and no more than 20 employees. You must meet at least two of those three limits in the current financial year and in each of the two immediately preceding financial years.
Is a dormant company automatically exempt from audit?
A dormant company — one with no accounting transactions since incorporation, or throughout the current and immediately preceding financial year — qualifies for audit exemption. It must still file unaudited financial statements and its annual return with SSM.
Can my shareholders still force an audit?
Yes. Members holding at least 5% of the shares, or 5% of the total number of members, can require an audit in writing, and the Registrar can also direct one, even if the company otherwise qualifies for exemption.
Does audit exemption mean I do not file financial statements?
No. You still prepare and lodge unaudited financial statements with SSM within 30 days of circulating them to members, through the MBRS portal, together with the directors' report and a statutory declaration.