Zavarco plc v Tan Sri Syed Mohd Yusof: limitation period runs from subscription, not forfeiture

In Zavarco plc v Tan Sri Syed Mohd Yusof Bin Tun Syed Nasir [2026] EWHC 338 (Ch), Master Brightwell granted reverse summary judgement to the defendant on the ground that Zavarco's claim for €36 million in unpaid share subscription monies was time-barred under the Limitation Act 1980.

The litigation has a lengthy history. Zavarco, an English public limited company incorporated in June 2011, issued proceedings in October 2018 seeking payment of €36 million from Mr Nasir, who had subscribed for 360 million shares on incorporation but had never paid for them in cash. The claim had been delayed by extensive satellite litigation, culminating in the Supreme Court's February 2025 ruling that the doctrine of merger does not apply to declaratory judgements — a point which had occupied the courts since 2019.

With the merger issue resolved, Mr Nasir applied for reverse summary judgement on limitation grounds. His case was straightforward: the contractual obligation to pay for the shares arose on incorporation in June 2011, and the six-year period under section 5 of the Limitation Act 1980 had therefore expired before proceedings were issued in October 2018.

Master Brightwell accepted this analysis. Drawing on the Court of Appeal's earlier decision in Zavarco plc v Sidhu [2022] EWCA Civ 1040, in which Snowden LJ had explained that a subscriber becomes both a member and a shareholder automatically upon registration under sections 16 and 112 of the Companies Act 2006, the Master held that no demand was required to bring the payment obligation into existence. The purpose of a call notice under the articles was to facilitate forfeiture and suspend the member's rights — not to create the obligation to pay, which already existed from the moment of subscription.

Zavarco contended that either forfeiture in June 2018 had generated a fresh limitation period, or that the call notice issued in June 2015 was the relevant trigger. Both arguments were rejected. On the forfeiture point, article 75.3.4 of Zavarco's articles preserved liability only for sums which the company "might have enforced" at the date of forfeiture. Since the contractual debt was already time-barred by that date, there was nothing remaining to preserve. Applying the strict construction required by Stocken's Case (1868), clear words would be needed to revive an already extinguished right of action, and none were present.

On the call notice argument, the Master applied the principle from Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia) [2023] that the accrual of a right to payment and the procedural steps required to enforce it are distinct. A provision imposing conditions on the bringing of proceedings does not delay the accrual of the cause of action unless it constitutes a true condition precedent to the right to payment itself. Article 69 did not satisfy that test.

Whilst declining to make a final order immediately — allowing Zavarco until 2 March 2026 to make further procedural submissions — the Master was satisfied in principle that reverse summary judgement should be entered. The judgement is a significant reminder that the limitation clock for subscriber obligations in English companies begins ticking at the moment of incorporation, regardless of when payment is demanded or shares are forfeited.

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