Shares issued for a promissory note might or might not be respected for tax purposes

Federally and in eight provinces the subscription for shares of a business corporation through the issuance of a promissory note of the subscriber is prohibited.  Consequences of breach are unclear:

• the shares might be invalidly issued (see Ball); or
• their issuance might be valid by virtue of s. 16(3) of the CBCA (or its provincial equivalent) stating that "no act of a corporation ... is invalid by reason only that the act ... is contrary to ... this Act" (a statement which, per Continental Bank, might be respected for tax purposes) – or as a result of an exercise of judicial discretion as per a line of provincial cases.

Neal Armstrong.  Summary of Marshall Haughey, "Issuing Shares for a Promissory Note," 24 Can. Current Tax, May 2014, p. 85 under s. 89(1) – paid-up capital.