Appointment of Auditor (Malaysia)

An Appointment of Auditor in Malaysia is the formal process by which a company appoints or re-appoints an approved company auditor to audit the company's financial statements under Sections 264 to 274 of the Companies Act 2016 (Act 777). Every company incorporated in Malaysia — with narrow exceptions for dormant companies under Section 267 — must have its financial statements audited annually by an approved company auditor, and the auditor must be appointed or re-appointed at each Annual General Meeting (AGM) or, for companies dispensing with AGMs, by written resolution.

An approved company auditor in Malaysia must be a member of the Malaysian Institute of Accountants (MIA) who holds a valid Audit Licence issued by the Audit Oversight Board (AOB) of the Securities Commission Malaysia under Section 8 of the Audit Oversight Board Act 2009 (for public interest entities) or an approval from the Minister of Finance under Section 8(2) of the Companies Act 2016 for companies generally. The MIA is the statutory body established under the Accountants Act 1967 that regulates the accountancy profession in Malaysia. Auditors of public interest entities — including Bursa Malaysia listed companies, licensed banks, and insurance companies — must additionally be registered with and supervised by the AOB.

Under Section 271(1) of the Companies Act 2016, the auditor of a company is appointed at the AGM by ordinary resolution of the members. The auditor first appointed by the board upon incorporation holds office until the first AGM under Section 271(4). Where a company dispenses with the AGM under Section 340(6), the auditor may be re-appointed by a Members' Resolution in Writing under Section 297.

An auditor of a company has the right under Section 275 of the Companies Act 2016 to attend any general meeting of the company, to receive all notices and communications relating to any general meeting that a member is entitled to receive, and to speak at the meeting on matters concerning the audit. The auditor's independent reporting obligation is to the members, not to the board of directors, and the auditor must report on whether the financial statements give a true and fair view under Section 266.

The legal framework governing the Appointment of Auditor (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Appointment of Auditor (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2016 (Act 777) sets the foundational requirements.

An Appointment of Auditor document is needed in Malaysia for every company that is required to have an annual statutory audit under the Companies Act 2016.

An Appointment of Auditor is required at the first Annual General Meeting of a new company to formally appoint the auditors who will audit the company's financial statements for the current and subsequent financial years, under Section 271(1) of the Companies Act 2016.

An Appointment of Auditor is needed annually at each AGM to re-appoint the existing auditors for the following year, with the re-appointment resolution typically included as a standard item in the AGM agenda together with authorisation for the board to fix the auditors' remuneration.

An Appointment of Auditor is required when the company's existing auditor retires, resigns, or is removed and the board must appoint a replacement auditor to fill the casual vacancy under Section 272(2) of the Companies Act 2016 by board resolution until the next AGM.

An Appointment of Auditor is needed when a company converts from a sole proprietorship or partnership to a Sdn. Bhd. and must for the first time appoint an approved company auditor to audit its financial statements in compliance with the Malaysian Financial Reporting Standards (MFRS) or Malaysian Private Entity Reporting Standards (MPERS).

An Appointment of Auditor is required when a listed company on Bursa Malaysia changes its auditor — a process subject to additional requirements under the Main Market Listing Requirements Rule 9.19, including prior notification to Bursa Malaysia and disclosure to shareholders of the reason for the change.

Parties in Malaysia should prepare a Appointment of Auditor (Malaysia) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid Appointment of Auditor for a Malaysia company must contain the following essential elements.

Auditor's Identity and Credentials: Full name of the audit firm or sole practitioner, MIA membership number, Audit Licence number (for public interest entities, the AOB registration number), and the principal partner or responsible individual for the audit engagement. SSM requires the auditor's details to be recorded in the company's register.

Eligibility Confirmation: Confirmation that the appointed auditor is an approved company auditor under Section 9 of the Companies Act 2016, holding a valid audit practice certificate from MIA, and is not disqualified under Section 264 (for example, the auditor must not be an officer, employee, or business associate of the company, or a person who has a financial interest in the company that would impair independence).

Scope of Appointment: Identification of the financial year(s) for which the auditor is appointed and the scope of the audit engagement — that is, to audit the financial statements of the company in accordance with Approved Standards on Auditing in Malaysia (ASAM) issued by the Malaysian Institute of Accountants.

Audit Fee: The agreed audit fee or the basis on which the fee is to be determined. The board is authorised by the members at the AGM to fix the auditors' remuneration under Section 271(6) of the Companies Act 2016.

Board or Members' Resolution: The ordinary resolution appointing or re-appointing the auditors, passed at the AGM or by Members' Resolution in Writing, stating the auditor's name, the financial year(s) covered, and the authorisation for the board to fix the fee.

Auditor's Consent: Written confirmation from the appointed auditor accepting the appointment and confirming compliance with the applicable ethical and independence requirements under the By-Laws on Professional Ethics, Conduct and Practice of the Malaysian Institute of Accountants.

Notice Obligations: If the appointment involves replacing an existing auditor, confirmation that the required special notice procedures under Sections 271 to 274 of the Companies Act 2016 have been followed, including giving the outgoing auditor an opportunity to make representations to the members.

Additional compliance elements for a Appointment of Auditor (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.