Often I will review agreements where clients are making
representations that shares are fully paid upon their issuance.
This practice has developed from US law and migrated north of the
border over time, but the basis for it as a concern here is rather
limited, even putting it charitably. Under Canadian law, shares
cannot be issued at all unless fully paid. You may want a
representation that the shares have been validly issued, but once
you have that, asking for one saying they are fully paid does not
actually get you any further. They can't be the former without
the latter.
This does, however, raise a question of what a fully paid share
should look like, not in terms of the appearance of the
certificate, but when you can count a share as fully paid so that
it can be issued and you can close your transaction. Let's take
a look at the three most common ways to pay for shares:
