The Companies Commission of Malaysia (SSM) issued a practice directive on August 4, 2017, outlining specific criteria for companies that qualify for audit exemption. The key conditions for audit exemption are as follows:
Dormant Companies:
Definition: Companies that have been dormant, meaning they have not conducted business, and no accounting transactions have occurred from the time of incorporation or throughout the current financial year and the immediate preceding financial year.
- Audit Exemption:
- For dormant companies incorporated on or after January 31, 2017, audit exemption is applicable.
- For dormant companies incorporated on or before January 30, 2017, audit exemption takes effect on the financial statements with annual periods commencing on or after September 1, 2017.
Zero-Revenue Companies:
- Definition: Companies that have no revenue and total assets not exceeding RM300,000 for three consecutive financial years (current year and the immediate past two financial years).
- Audit Exemption: Applicable for zero-revenue companies' financial statements with annual periods commencing on or after January 1, 2018.
Threshold-Qualified Companies:
Definition: Companies meeting the following criteria:
(a) Revenue not exceeding RM100,000 during the current financial year and the immediate past two financial years.
(b) Total assets in the current Statement of Financial Position (FS) not exceeding RM300,000 in the current financial year and the immediate past two financial years.
(c) Not more than five employees at the end of the current financial year and in each of the immediate past two financial years.
- Audit Exemption: Applicable for threshold-qualified companies' financial statements with annual periods commencing on or after July 1, 2018.
It's important to note that this exemption does not apply to an exempt private company that has chosen to lodge a certificate related to its status as an exempt private company with the Registrar, as per section 260 of the Companies Act 2016.
For further details and the original SSM Practice Directive, you can refer to the
SSM Practice Directive.
Malaysia