Under the heading Why would a company issue unpaid shares? by Johnathan Korchak

Although unpaid and partly paid shares are far less common than fully paid shares, there are a number of reasons why a company might choose to issue them:


[second-last bullet] In line with a strategy to implement an acquisition or merger of companies.

Under the heading Why would I issue unpaid shares?

Companies may choose to issue partly-paid or unpaid shares for a variety of reasons, including:


[last bullet] As part of a strategy to implement a merger or acquisition.


Why would a company issue unpaid shares?

Possible reasons are:

  • buyer's temporary lack of sufficient funds to perform the acquisition, whence the issuer of shares is willing to grant credit for the sake of "closing the sale";
  • fiscal planning (be it the buyer's and/or the issuer's planning) might be such that delaying payment of shares will place him at a more convenient tax bracket in the acquisition and/or disbursement fiscal year(s) (this is more evident in cash based accounting systems), and/or the delay of payment will allow him to qualify for certain tax deductions;
  • issuer predicts the price of shares will fall (and possibly discourage prospects of merger/acquisition), so he hedges against that risk by entering a forward contract with the buyer, with the incentive --to the buyer-- that transfer of shares will be effective immediately;
  • buyer is willing to commit to a higher price on unpaid shares so as to anticipate upcoming legislation that will make it harder to perform akin mergers/acquisitions.

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