i) The likely reasons for seeking a quotation are listed below:

• To provide an immediate basis of valuation for the share and a market in which they can be readily exchanged for cash.
• A quotation gives access to the savings of the public when a company wishes to recruit further capital for expansion.
• Amalgamation between companies is easier if part of the price to be paid is in shares, quoted in a stock exchange. The fact that shares of the enlarged company are marketable will facilitate the merger.
• After a quotation, the shareholders have a ready market for their shares. They can exchange them for cash or use them more easily as a form of security.

(4 points for 4 marks)

ii) The prior considerations to obtaining a stock exchange quotation are as follows:

• The company must meet the requirements of the Ghanaian Stock Exchange. Depreciation must have been sufficient in the past, and the accounts must have been drawn up in a proper manner.
• The records of the past profits must be such that the public will be eager to invest in the company. There must be a degree of certainty that profits will continue at or above this level into the future. Consideration must be given to the fact that a more generous dividend policy will have to be pursued in the future.
• Before obtaining a quotation, the board must consider the best method to bring the firm to the market, how much money to raise by the issue, the price at which the offer is made to the public, and whether the offer is to be underwritten.
• The interest of the present shareholders must be considered. Thought must be given as to whether they can maintain control after the issue. The assets of the company must be revalued, and the surplus distributed as bonus shares.
• The type of new capital to be raised. The pros and cons of debentures, preference, and ordinary shares must be considered.

(Any 3 points for 3 marks)

iii) The methods of marketing a company are as follows:

• Public issue by prospectus: This is a direct issue to the public by means of a prospectus and advertisements detailing the number, class, and price of the shares offered.
• An offer for sale: This is made by an issuing house to the public, of the shares which it has previously bought from the owner of the business. Sometimes the owner offers the shares on his own behalf.
• Offer for sale by tender: This method, which has been used on a number of occasions in recent years for the issue of ordinary shares, is similar to the offer for sale, except that the issuing house (instead of offering the shares at a fixed price) invites the public to send in tenders at a fixed price, inviting the public to send in tenders for the shares at or above a minimum price, stating the maximum number of shares they would take. In the light of the tenders received, the issuing house then fixes a price (the striking price) at which the shares will be allotted.
• A Placing: This occurs when shares brought onto a Stock Exchange for the first time are sold privately. A stock broker or issuing house may arrange for the issue to be taken up by the clients or contracts.
• An Introduction: This is not a method of raising new capital, but of getting permission to deal, i.e., introducing the shares of a small company to the market.

(Any 3 points for 3 marks)