Sec 264: Disqualification

The statutory disqualification reasons for an auditor under Companies Act 2016 (s.264):

1. Not an approved company auditor (s.264(1)(c)(i)). SSM

2. Indebted > RM25,000 to the company or a related corporation (s.264(1)(c)(ii)). SSM

3. Conflicting roles/relationships (s.264(1)(c)(iii)): the person—
     A. is, or the spouse is, an officer of the company;
     B. is a partner/employer/employee of an officer;
     C. is a partner/employee of an employee of an officer;
     D. is a shareholder (or spouse is) of a corporation whose employee is an officer of the company. SSM

4. Responsible for the register of members or debenture holders (or partner/employer/employee of the person responsible) (s.264(1)(c)(iv)). SSM

5. Undischarged bankrupt (inside or outside Malaysia), except with leave of Court (s.264(1)(c)(v)). SSM

6. Convicted of fraud/dishonesty with imprisonment ≥ 3 months (s.264(1)(c)(vi)). SSM

For audit firms: they must not act unless all Malaysia-resident partners are approved company auditors and no partner is disqualified under s.264(1) (s.264(4)(a)–(b)). SSM

Important 2024 update (s.264(4A))

A partner is not disqualified merely because their spouse is an officer of the audited company if independence isn’t compromised and the SSM Guidelines (1 Apr 2024) are met (exception doesn’t cover spouse as director or company secretary). SSM+1