Malaysia Introduces Phased Audit Exemption for Private Companies (Effective 2025)
The Companies Commission of Malaysia (SSM) has issued Practice Directive 10/2024, introducing audit exemptions for private companies starting January 1, 2025. This allows eligible companies to forgo annual audits, saving on audit fees and time. However, they must still prepare and submit financial statements to SSM.
1. Eligibility Criteria:
Private companies can qualify for audit exemption if they meet at least two of the following criteria for the current and past two financial years:
- Annual Revenue ≤ RM3,000,000
- Total Assets ≤ RM3,000,000
- Employees ≤ 30
2. Phased Implementation (2025-2027):
To ensure a smooth transition, the eligibility thresholds will increase progressively:
| Year | Financial Period | Submission Year | Revenue Threshold | Asset Threshold | Employee Threshold |
|---|---|---|---|---|---|
| 2025 (Phase 1) | January 1, 2025 – December 31, 2025 | From Jan 1, 2026 | RM1,000,000 | RM1,000,000 | 10 |
| 2026 (Phase 2) | January 1, 2026 – December 31, 2026 | From Jan 1, 2027 | RM2,000,000 | RM2,000,000 | 20 |
| 2027 (Phase 3) | Commencing on or after January 1, 2027 | From Jan 1, 2028 | RM3,000,000 | RM3,000,000 | 30 |
Companies must compare their figures against these thresholds. If at least two exceed the thresholds for the relevant year, an audit is required.
3. Who is Affected?
This applies to all private companies limited by shares, except:
- Exempt private companies (EPCs)
- Public companies
- Subsidiaries of public companies
- Foreign companies
These excluded companies must still have their financial statements audited.
4. Financial Statement Requirements:
Exempt companies must still prepare and file unaudited financial statements with SSM, compliant with Sections 258 and 259 of the Companies Act 2016 and applicable accounting standards (MPERS or MFRS). (Contact Crowe Malaysia for assistance with this.)
5. Transition Period:
This replaces Practice Directive 3/2017 for financial periods starting January 1, 2025. Prepare now for compliance.
