Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Nil paid definition

What does Nil paid mean? Nil paid describes shares or rights that have been issued but for which none of the nominal value (and any share premium) has yet been paid. The holder remains liable to pay the unpaid amount when the issuer makes a call or as specified instalments fall due. This is a descriptive market term, not a statutory definition. Its legal consequences follow the rules on partly paid shares under the Companies Act 2006 (UK) and the Companies Act 2014 (Ireland), and the company’s articles. Key features typically include liability for calls (with possible interest), potential forfeiture on non‑payment, company lien,...

Nil and partly paid shares: UK tax treatment of employment-related securities—s431 elections, Chapter 3C notional loans, RCA/PAYE and NICs, CGT, and CTA 2010 s455 issues

Published by a LexisNexis Share Incentives expert

Practice notes

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Overview of nil paid and partly paid shares

The chance to take up or buy shares on a nil or part-paid basis has long been, and remains, in practice, a fairly routine and well-used way to broaden share participation. The usual aim is to let people own shares in a company as other shareholders do, and potentially enjoy comparable rights, while postponing the cash outlay for those shares. This offers a pragmatic commercial approach and can bring both tax benefits, yet it also exposes the individual to possible liabilities for the unpaid subscription amount. These arrangements resemble an option in that payment of the whole or a portion of the price is required only later or on certain specified triggers, such as a company sale, a listing, or when the company makes a call for the outstanding sum. The crucial difference from options is that the shares are issued to the individual at the start. The terms for nil paid shares can be tailored to fit commercial objectives and must be sanctioned by the company’s articles of association...

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Web page updated on 21/05/2026

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