The Companies Commission of Malaysia (“SSM”) on 4/8/2017, issued Practice Directive No. 3/2017 entitled “Qualifying Criteria for Audit Exemption for Certain Categories of Private Companies”.
This Practice Directive is issued pursuant to Section 20C of the Companies Commission of Malaysia Act 2001 and Subsection 267(2) of the Companies Act 2016 (“CA 2016”). It sets out the qualifying criteria for private companies from having to appoint an auditor in a financial year i.e. audit exemption.
Practice Directive No. 3/2017 indicates that
dormant companies, zero-revenue companies and threshold-qualified companies qualify for audit exemption and it shall take effect as follows:
(a) In the case of a dormant company,
• where the company is incorporated on or after 31 January 2017, the financial statements with annual periods commencing on or after 31 January 2017; and
• where the company is incorporated on or before 30 January 2017, the financial statements with annual periods commencing on or after 1 September 2017.
(b) In the case of zero-revenue companies, for financial statements with annual periods commencing on or after 1 January 2018.
(c) In the case of threshold-qualified companies, for financial statements with annual periods commencing on or after 1 July 2018.
We are in the view that this effort can release the compliance costs for domant & zero revenue companies. However, the directors can still opt for compilation of financial reports as what Singapore done. And for relevant authorities & apply bank loan purpose, get some review & perform compilation still be necessary for add value to the creditibility of financial reports.