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Many private companies in Malaysia face significant compliance costs linked to statutory audits. To reduce this burden, the Companies Commission of Malaysia (SSM) introduced audit exemptions under Practice Directive 3/2017. These reliefs apply to dormant companies, zero-revenue companies, and small companies that are threshold-qualified. Starting in 2025, new criteria also allow more low-revenue and small businesses to qualify.
1. Existing Categories That Qualify
Under the current rules, until 31 December 2024, three categories of companies may be exempt:
- Dormant companies that have had no activity since incorporation or during the past two financial years.
- Zero‑revenue companies with no income and total assets under RM300,000 over the past two years.
- Threshold‑qualified companies with annual revenue below RM100,000, assets below RM300,000 and no more than five employees for the past two years.
These categories have offered relief to small and inactive companies in Malaysia. However, uptake was low due to stringent thresholds—only 7% of eligible firms applied.
2. New Criteria from 2025
From 1 January 2025, SSM will invoke Practice Directive 10/2024, widening eligibility through a phased approach. To qualify, a private company simply needs to meet any two of these criteria over the current and past two financial years:
- Annual revenue not exceeding RM3 million
- Total assets not exceeding RM3 million
- No more than 30 employees
Dormant companies continue to qualify automatically under this directive.
3. Phased Implementation Structure
The new thresholds will be introduced gradually:
| Phase | Financial Year Begins | Revenue & Assets Limit | Employee Limit | Filing Year Begins |
| Phase 1 | 1 Jan 2025 | RM1 million | 10 employees | 1 Jan 2026 |
| Phase 2 | 1 Jan 2026 | RM2 million | 20 employees | 1 Jan 2027 |
| Phase 3 | 1 Jan 2027 | RM3 million | 30 employees | 1 Jan 2028 |
These tiers allow businesses to plan ahead and benefit from exemptions as they grow.
4. Conditions and Exclusions
Some companies remain ineligible:
- Public companies, listed entities or private firms that are public company subsidiaries.
- Foreign companies.
- Private companies that have lodged an exempt private company certificate under Section 260 of the Companies Act 2016.
If a company no longer fulfils the criteria, it will lose the exemption going forward, but remain exempt for the past qualifying year.
5. Requirements for Claiming Exemption
Exemption is granted automatically, subject to these filing obligations:
- Submission of unaudited financial statements with the director’s report, statement by directors and a statutory declaration via SSM’s MBRS XBRL system.
- Attachment of a director-signed certificate confirming compliance with the Companies Act 2016 and MPERS or MFRS.
- Lodging of supporting documents within 30 days of circulation to members.
Even though exempt from audit, these companies remain liable for accurate XBRL filings and may face fines if they fail to lodge in full.
6. Benefits for SMEs
Relaxed exemption thresholds will alleviate the costly burden of audits for many SMEs. SSM estimates more than 40 per cent of active companies may qualify immediately. SMEs can redirect audit fees toward business expansion or innovation.
At the same time, phased implementation ensures corporate transparency and governance standards remain appropriate for the size and scale of the business
Making Audit Exemption Work for Your Business
Understanding how audit exemption works in Malaysia provides dormant and low-revenue companies with a genuine opportunity to reduce compliance costs without compromising their legal obligations. With the new thresholds rolling out in phases, more SMEs than ever will be able to benefit, provided they meet the proper criteria and file accordingly.
If your company may qualify, now is the time to review your financial position, plan your filings, and ensure you meet all SSM requirements. Altomate provides hands-on support to help you assess your eligibility, prepare unaudited financial statements, and submit MBRS applications with confidence.
Let Altomate help you make audit exemption work in your favour.
