Keeping Your Company’s Financial Information Private

The Strategic Advantage of Being an Exempt Private Company

An exempt private company (EPC) that meets the requirements may file a Certificate Relating to An Exempt Private Company (Certificate of Status) with the Companies Commission of Malaysia (CCM) instead of lodging MBRS (XBRL) financial statements. This approach keeps the company’s financial information confidential - financial details are not available for public inspection or purchase.

Definition of an Exempt Private Company

An Exempt Private Company (EPC) is a private company with no corporate shareholders and a small shareholder base (max 20 individual members).

Section 260 Requirements

To qualify for the abovementioned simplified filing and confidentiality of financial information, the EPC must meet these requirements:

a.The audited financial statements and reports have been circulated to all members.

b.The director, company secretary, and auditor sign the Certificate of Status, confirming the company can meet its liabilities as they fall due (i.e. it is solvent).

c.The company has remained an Exempt Private Company at all relevant times.

Filing XBRL is Not Required

If the exempt private company files the Certificate of Status and fulfils all Section 260 conditions, it is not required to prepare or file its financial statements in XBRL format, thereby saving the costs associated with XBRL preparation and submission.

Frequently Asked Questions

a. Are shareholders still entitled to receive the audited financial statements if the company opts to file the Certificate of Status?

Yes. Filing the Certificate of Status only exempts the company from lodging financial statements with CCM. The company must still prepare audited financial statements and circulate them to all shareholders.

b. Our company is an Exempt Private Company and qualifies for audit exemption (e.g. dormant companies). Can we file the Certificate of Status to keep our financial statements private?

To file a Certificate of Status, the company must have audited financial statements that have been circulated to all members in accordance with Section 260(2), and the Certificate must be signed by the auditor after completing the audit.

If confidentiality is important, an audit-exempt company can choose to voluntarily audit its accounts to qualify to file the Certificate of Status.

c. We have 3 individual shareholders (90%) and 1 corporate shareholder (10%). Can we file a Certificate of Status to keep our audited financials private?

No. The company does not qualify as an Exempt Private Company because it has a corporate shareholder. Only companies wholly owned by individual shareholders can file the Certificate of Status and enjoy the confidentiality of financial information.

d. The company has posted losses for several consecutive years, depends on shareholders’ advances to stay afloat, and has received legal collection notices from suppliers. Do we qualify to file the Certificate of Status?

Likely no. Directors must be able to declare the company solvent—able to pay debts as they fall due. Persistent losses, dependence on advances, and collection notices indicate the solvency test may not be met, so the Certificate of Status cannot be signed.