There’s assistance for companies

WE refer to the “Text Us!” message “Help for companies” (The Star, March 24) by Ashraf, who suggested that the Companies Commission of Malaysia (SSM) introduce special measures to assist dormant companies especially in reducing the costs of auditing.

SSM, a statutory body that regulates the incorporation of companies and registration of businesses and limited liability partnerships, among others, has already introduced various initiatives to assist the business community in the difficult and challenging environment of the Covid-19 pandemic.

All SSM initiatives to assist the business community in 2020 and 2021 can be accessed at

Further to Ashraf’s comments, SSM would like to highlight that audit exemption measures have been in place since 2017, where certain categories of private companies are given exemption from the requirement to appoint an auditor for the purpose of auditing financial statements.

For the purpose of audit exemption pursuant to section 267(2) of the Companies Act 2016, SSM issued Practice Directive No. 3/2017 (PD 3/2017) on Aug 4,2017, which sets out the qualifying criteria for audit exemption for different categories of private companies, namely Dormant Companies, Zero-Revenue Companies and Threshold-Qualified companies.

A private company is considered dormant if it has not carried out any business since its incorporation or for two consecutive financial years. A Zero-Revenue company is a private company that does not have any revenue for three consecutive financial years and its assets do not exceed RM300,000 in the preceding two financial years.

Threshold-Qualified companies are companies having revenue of less than RM100,000 for three consecutive financial years and, in the preceding two financial years, having assets of less than RM300,000 and not more than five employees.

For further clarifications on the requirements to qualify for an audit exemption, the PD 3/2017 can be accessed at the SSM portal,

The audit exemption criteria were introduced to ensure that dormant and smaller companies are not unduly burdened with high compliance costs while ensuring that the assurance provided by the auditing process would still be intact for larger companies.

However, SSM reiterates the importance of preparing financial statements and having them audited as the cornerstone of corporate governance. The auditing process is a form of check and balance, which serves as a vital component in the governance of a company.

Audited financial statements provide a reliable source of information to shareholders and other interested third parties such as future investors, financiers and other authorities dealing with a company.

Further, if a company is dormant, there are alternatives available for it; it can choose to lodge the unaudited financial statements at SSM pursuant to PD 3/2017 (if it is qualified to do so) or to apply to SSM to be struck off if it is no longer doing business. A dormant company that has applied for striking off gets to enjoy a compound reduction of up to 90% if the application is made on or before June 30,2021.


Kuala Lumpur

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