Understanding Exempt Private Companies in Malaysia

Exempt Private CompanyAn Exempt Private Company (EPC) in Malaysia is a specific category of private company defined under the Companies Act 2016. It must meet two main criteria: it is privately owned with no more than 20 shareholders, and none of its shares are held by corporations. This classification provides distinct advantages, particularly regarding financial reporting and compliance requirements.

 

Key Features of Exempt Private Companies

  • Shareholding Structure: The company must be privately owned, with shares held by individuals and not corporations.
  • Maximum Shareholders: The total number of shareholders is limited to 20, ensuring the company remains private in nature.
  • Financial Reporting: EPCs are not required to file financial statements with the Companies Commission of Malaysia (SSM) if they meet certain conditions.

 

Advantages of Exempt Private Companies

The designation of an EPC offers several benefits that make it an attractive option for small businesses and family-run enterprises. These include:

  • Confidentiality: Since EPCs are not required to disclose financial statements publicly, they maintain greater privacy over financial data.
  • Simplified Compliance: Compliance requirements are reduced compared to other private companies, saving time and administrative effort.
  • Lower Costs: With fewer reporting obligations, the cost of running an EPC is typically lower, making it ideal for smaller companies.

 

Compliance Requirements for Exempt Private Companies

Although EPCs enjoy reduced obligations, they must still adhere to several regulatory requirements to maintain their status. These include:

  • Annual Returns: Filing of annual returns with SSM remains mandatory to keep the company’s registration active.
  • Director Duties: Directors must fulfil their fiduciary duties and ensure the company complies with relevant laws and regulations.
  • Private Status: The company must ensure that none of its shares are transferred to corporations, as this would revoke its exempt status.

 

Significance of Exempt Private Companies

EPCs play an essential role in Malaysia’s business ecosystem by supporting small and medium-sized enterprises. They encourage entrepreneurship by providing a flexible and cost-effective corporate structure. Furthermore, the confidentiality offered by EPC status makes it particularly appealing to family-run businesses that prefer not to disclose financial details publicly.

For further details on exempt private companies, visit the Suruhanjaya Syarikat Malaysia (SSM) website.