High Court confirms claim for unpaid subscriber shares may be time-barred after six years

If they are used, then ultimately the shareholder in question would be expected to pay up the subscription price for those shares at some point in the future. But when? And importantly, can a company run out of time to ask for payment?  

The High Court has held that a company’s claim for payment for shares subscribed for on incorporation was time barred where proceedings were issued more than six years after the payment obligation first arose. The decision underlines the importance of identifying when a shareholder’s liability to pay crystallises and acting promptly to enforce it, otherwise the company could lose the opportunity to enforce the obligation to pay. 

In this case, the defendant had subscribed for shares on incorporation of the company in June 2011, but the subscription payment had not been made and so the shares were not “fully paid”.  

In June 2015 the company started a formal process to call in the payment, by serving a “call notice” as provided for in its articles of association, followed by a notice of intended forfeiture in June 2016.  

Payment was not received. The company therefore forfeited the shares (i.e. took them away from the shareholder) in June 2018 and then issued proceedings for payment the following October. 

The court held that the claim was time-barred under section 5 of the Limitation Act 1980. More than six years had passed between the point at which the shareholder’s payment obligation arose and the commencement of proceedings.  

Critically, the court found that the obligation to pay arose on incorporation in 2011 (when the shares were issued), not when the company later issued a call notice or forfeited the shares. The liability was treated as a contractual debt owed to the company. Standard contractual debts tend to be subject to a six year limitation period under UK law.  

The court rejected the argument that payment only became due following a demand, and it also rejected the suggestion that the arrangement could be characterised as an implied loan. On the wording of the company’s articles of association, the call notice was merely a procedural step designed to support forfeiture of unpaid shares; it did not create the payment obligation or restart the limitation period. 

The court also held that an article in the company’s articles of association which expressly referred to and preserved liability after forfeiture did not revive a claim that was already time-barred, nor did it create a new cause of action. It simply preserved liabilities that the company could still have enforced had the shares not been forfeited.  

By the time forfeiture occurred, the six-year limitation period had already expired. 

The judgment is a useful reminder that companies do not have forever to call in payment for shares.  

Companies also cannot assume that internal enforcement steps, such as call notices, intended forfeiture notices or forfeiture itself, will postpone or refresh the limitation clock.  

Where shares remain unpaid after they have been subscribed for, the key question is likely to be when the original contractual liability arose. If that date is the date the shares were issued, delay in enforcement may be fatal to recovery. 

For companies and advisers, the case highlights the need to review historic share subscriptions carefully and assess limitation risk at an early stage. A subscriber’s liability to pay for shares may arise immediately after the shares have been issued, and later enforcement mechanisms in the articles may not save a claim brought out of time.  

The decision was Zavarco Plc v Nasir [2026] EWHC 338 (Ch) (23 February 2026).