# Unaudited Financial Statements: What You Actually Lodge When Exempt

> Audit exemption removes the auditor, not the filing. What an exempt Sdn Bhd must lodge with SSM, the certificate that has to accompany it, and how the s.259 clock still applies.

- Category: company-secretary
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/company-secretary/unaudited-financial-statements

---

Qualifying for audit exemption feels like the end of a compliance problem. It is
the start of a different one, because the filing duty does not move.

Paragraph 15 of Practice Directive 10/2024 is explicit: a company that elects
audit exemption must lodge its unaudited financial statements with the Registrar
accompanied with the required certificate, in compliance with sections 258 and
259 of the Companies Act 2016.

Same sections. Same clocks. Same penalties.

## The deadline is unchanged

Because s.258 and s.259 apply on their own terms, an exempt private company
runs the identical two-step sequence as an audited one:

1. **Circulate** the financial statements and reports to members within six
   months of financial year end — s.258(1)(a).
2. **Lodge** with SSM within 30 days from the date of circulation —
   s.259(1)(a).

There is no relaxation for exempt companies. If anything the risk is higher,
because removing the auditor removes the external party who used to drive the
timetable. The full mechanics, including a worked financial year end, are in
[circulating and lodging financial statements](/en/company-secretary/financial-statements-lodgement).

## What goes in the lodgement

Practice Directive 10/2024 sets out the package:

| Component | Basis |
| --- | --- |
| Unaudited financial statements complying with approved accounting standards | para 16, s.244(1) — MFRS or MPERS |
| Directors' report | para 17 |
| Statement by directors | para 17 |
| Statutory declaration | para 17 |
| Lodgements required under ss.251 and 252 | para 17 |
| Audit exemption certificate | paras 18 and 19, Appendix 1 |

The point people miss is the first row. Unaudited does not mean informal: the
statements must still comply with the approved accounting standards issued by
MASB under s.244(1) — in practice MPERS for most private entities. A management
account exported from accounting software is not a set of financial statements.

## The audit exemption certificate

This is the document that distinguishes a compliant exempt lodgement from an
incomplete one, and it is short. Appendix 1 of Practice Directive 10/2024
requires it to state:

- that **members have not requested** an audit of its accounts for that year
- that **the directors acknowledge their responsibilities** under the Companies
  Act 2016 for accounting records and the preparation of the financial
  statements
- that the financial statements have been prepared in accordance with the
  applicable approved accounting standards issued by MASB — the Appendix names
  MPERS — and comply with the Companies Act 2016

It must also record the date the statements were circulated to members. That
date is the evidence of when the s.259(1)(a) clock started.

Paragraph 19 requires the certificate to be **signed by a director**, certifying
that the company is entitled to exemption under s.267(2). Where the signing
director is not primarily responsible for the financial management of the
company, **the name of the person who is** must also be stated.

## The section 260 route is a different thing entirely

An exempt private company has an alternative under s.260(1): it may lodge a
certificate as to its EPC status **in lieu of** the s.259(1)(a) requirement,
within 30 days from circulation. That certificate must be signed by a director,
the auditor **and** the secretary, confirming that the company has at all
relevant times been an exempt private company, that duly **audited** financial
statements have been circulated to members, and that the company appeared able
to meet its liabilities as they fall due.

The two routes are mutually exclusive. Paragraph 12(a) of Practice Directive
10/2024 states that audit exemption does not apply to an exempt private company
which has opted to lodge the s.260 certificate — the reason is visible in the
certificate itself, which requires an auditor's signature and asserts that
audited statements were circulated. EPC certificate means audited accounts;
audit exemption means unaudited accounts lodged in full.

Failing to lodge the s.260 certificate when that route is taken is an offence
under s.260(3), carrying a fine up to RM20,000 plus up to RM1,000 for each day
the offence continues.

## Filing format

Unaudited financial statements, and exempt private company certificates, were in
the **first** MBRS 2.0 mandatory phase on 1 December 2024 — earlier than audited
statements, which came in under Phase 3 on 1 June 2025. The lodgement fee is
RM20, against RM50 for audited statements.

## Common mistakes

- **Reading exemption as a filing exemption.** Paragraph 15 says the opposite.
- **Lodging management accounts.** The statements must comply with approved
  accounting standards under s.244(1).
- **Omitting the audit exemption certificate**, which makes the lodgement
  incomplete even if the accounts are fine.
- **Signing the certificate without naming the person responsible for financial
  management**, where the signing director is not that person.
- **Confusing the s.260 EPC certificate with the audit exemption certificate.**
  Different documents, different signatories, mutually exclusive routes.
- **Losing the timetable once the auditor is gone.** The six-month circulation
  deadline still runs, and nobody outside the company is watching it.

## What's next

Confirm you actually qualify before relying on the exemption — the thresholds
are phased and the test is at least two of three criteria, not all three. Then
put the circulation date in the calendar yourself.

## Sources

- Practice Directive No. 10/2024 — Qualifying Criteria for Audit Exemption for Certain Private Companies in Malaysia — https://www.ssm.com.my/Pages/Legal_Framework/Document/PD10_2024%20Qualifying%20Criteria%20for%20Audit%20Exemption%20for%20Certain%20Private%20Companies%20in%20MY161224.pdf (SSM)
- Companies Act 2016 (Act 777), updated text as at 1 August 2022 — sections 244, 258, 259 and 260 — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)
- Pengumuman: Pelaksanaan Mandatori Berperingkat MBRS 2.0 — https://www.ssm.com.my/Lists/Announcement/AnnouncementDetails.aspx?ID=379 (SSM)
- Companies Act 2016: Practice Directive No. 1/2017 (Revised 1 October 2024) — Late Lodgement Penalties — https://www.ssm.com.my/Pages/Legal_Framework/Document/Practice%20Directive%201_2017%20(Revised)%201%20Oct%202024.pdf (SSM)

---
Source of truth: https://github.com/negaraku-md/NegaraKu.md
License: CC BY-SA 4.0