EXEMPT PRIVATE COMPANY
By AZIZAM AZIZAN
The Basics of Private Exempt Companies
In the realm of business and commerce, the concept of an Exempt Private Company (EPC)
stands as a unique and strategic structure that extends distinct advantages to certain
enterprises. Rooted in company law, the notion of an EPC revolves around a set of criteria
that, once met, opens the door to a range of benefits tailored for specific business
circumstances. By offering reduced regulatory obligations and financial reporting
requirements. This article delves into the fundamental aspects of Exempt Private Companies,
shedding light on their qualifications, advantages, and the broader implications they hold within
the modern business landscape.
Advantages ‘Exempt Private Company’ status
EPCs enjoy significant advantages under the CA2016. They are exempt from the obligation to file comprehensive financial statements and reports with the ROC. Instead, EPCs only need
to submit two items to the ROC, a certificate signed by the company’s directors confirming its
EPC status and an auditor’s statement affirming that the company maintains proper
accounting records and appears capable of meeting its liabilities as they come due.
Audit Exemption
Act 1965, elaborate on the concept of audit exemption. While generally, all companies must
prepare and have their financial statements audited, the Registrar of Companies has the authority to exempt specific categories of private companies from this requirement. The
a. Dormant companies: Companies that are not actively engaged in business operations.
b. Zero–Revenue companies: Companies that generate no revenue.
c. Threshold–Qualified companies: Private companies that meet specific criteria set by the
Registrar.
Compliance and Obligations
Although certain private companies are exempt from undergoing an audit, they are still legally
obligated to maintain proper accounting records and prepare financial statements as
mandated by the Companies Act 2016 and lodge financial statements with the Registrar.
These statements must adhere to approved accounting standards. The absence of an audit
should not compromise the accuracy and reliability of financial statements. The Companies
Act 2016 underlines the importance of maintaining the integrity of financial reporting. This
requirement applies universally, regardless of whether a company qualifies for audit
exemption or not.
Legal Consequences of Fraudulent Reporting
It is essential to note that intentionally submitting fraudulent financial statements is a serious
offense under section 593 of the Companies Act 2016. Companies and directors found guilty
of lodging false or misleading statements with the Registrar can face prosecution.