Project on the Construction Company: Doc
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Added on 2019-10-08
Project on the Construction Company: Doc
Added on 2019-10-08
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A Hong Kong Continuous Professional Education CentreProject on the Construction CompanyPart -1Company -1Legal Status: CK Infrastructure Holdings; public limited companyTypes of work carried out: Infrastructure providing company engage in providing infrastructure interms of electricity distribution, gas distribution, investment in the water, power plants, energy fromwaste plant and oil transmission.Finance and equity: Company has balanced their financial position and has its finance from banksother financial institutions. Company has its equity prospects as well. The company equity shares arebeen increasing every year due to higher retained earnings.Legal requirements for company dissolution: The legal requirement of the company to get dissolve isnot active as of now as there is no mitigation factors to attract the same. The company is workingprogressing each year and the company is able to mitigate their current liabilities and able to fulfillthe return required from the shareholders and there is no stage that shows that the company isgoing to fraudulent to the debt taken from the financial institutions. The company has been able tomitigate the financial risks like currency risk, interest rate risk, credit risk and liquidity risk. So, as thecompany has able to work with the risks so the competitive working scenario has been changed. Theofficial requirement of the dissolution is as follows:-the company has not operated and there is no business since last 3 months when thecompany has been register;-Creditors has filed case about the litigation of the company;-Losses for more than 5 years and there is going concern effect-Shareholders files the case of deregistration and company court has approved the same;-Before deregistration it is been complied that whether there is any obligation which has notbeen filled by the company, or the company needs to auction their assets;-Once the assets are been auction and all the liabilities are been paid off then the companyrepay the funds to the shareholders on the amount brought by them-Once the shares are been repaid to the extend of the amount remaining the court ofcompany obtains a notice of no objection from all the stakeholders and then dissolve thecompany.Since the company is working on the fine tune so the company need not to follow the process ofdissolution as of now.
Company -2Gammon ConstructionLegal Status: Private Limited companyTypes of work: Construction and engineering contract company, which involved in various projects inchina and Southeast Asia. Finance and Equity: Company has been financed by equity and loan as well. The debt equity ratio has been balanced.Company-3Goodman Interlink Legal Status: limited liability partnership CompanyTypes of work: the company is engaged in providing industrial and logistics requirement. The totalsize of the company is 225177 sqm. This is known to be the fourth largest development company inthe field of warehousing. The features provided in their sites are parking, security and many otherservices which run 24-7. This is the major achievement of the company in terms if building themartials for the warehousing purpose. Finance and Equity:The company is involved in the equity and financing events. There are funding activities with theequity fund of the company. it helps the company to raise the capital for their construction works.The higher standard works of the company has been able to raise HK5 million in the total amount ofprofit for the period of 2018. The global consumption of the company is going to be increased by 23trillion by 2030. The total asset under management of the company is 34.6bn. Legal requirements for company dissolution:The company debt equity ratio is 0.35, which means the company is been able to repay their longterms debts with the retained profit of the company. Further, the current ratio of the company isalso potential enough to repay their current assets and raise long term planning. Therefore, thewinding up or solvent condition is going to arise fur the company. This is being revealed in the Zscore test of the company performed in the annual report. So, the legal requirement for companydissolution is to shows:The business is being formed to earn the profit. It could nit indulge in the nonprofit activitiesor charitable activities. The central government has right t reside the investigation of the company. This is beingperformed for the company by the central government personnel. The filing fir the limited liability is being dine with the e filing process. The partners who are designated for the legal compliance takes the actions of the legalactivities Common seal is applied for the business and its uses it as a separate legal entity to recordthe business transactions of the company. The growth has been marked in the work in progress of the company. It has managed to keepthe record if the several developments. The company has developed 3.5 billion HK of profit from
its 75 projects. This being earned from all over the world. It is being highest in the last five yearsfor the company. there is development in the gearing ratio. This will keep the company freefrom the fear of dissolution. the percentage of the gearing ration in 23.9 percent. it has seenremarkable achievements under 5 years. It helps the company to maintain the liquidity positionof the company. The working capital requirement of the company is met properly. Company 4Tapbo Civil Engineering Co Limited Legal Status: sole proprietor The company is being registered with the registration number GBC 12/2001. It is involved in buildingdecoration, renovation and construction process. The registration of the company as sole proprietorwill expire on 2020 July 11. Recently the company has contract for the run projects in Hong Kong. Itwill have three runway projects. The trading is done solely by the company. It does not have anyparticular listed company as a partnership company. Types of work: The company is not designated as fictious under the legal declarations. It hasmanaged to maintain the proportion if the separate legal entity for the business. It holds theposition of the limited liability partnership and manages its works accordingly. It follows the LLP actformed in 2008. The business and the partners have separate legal entity. Port works and siteformation are the major construction parts of the company. it has legal recipient sites where theywork.Finance and Equity:The revenue of the company for the period of 2017 was 50152524 HK dollars. The earning per shareof the company fir the same period is 118.85. this is being better than the earning of the 2016. Thecompany uses the debt fund to collect most of the capital. This is being seen in the financialstatement that borrowing of the company is more than the owners fund. Notes payable anddeferred tax liabilities are found to be in major condition. The equity position of the company is notbetter than the borrow mg. The company is managing its capital by the use of the debt fund.Legal requirements for company dissolution:The dissolution of the company is not in the near future. This is because the profit earned by thecompany is enough to maintain the going concern concept of the business. However, at the time ofthe dissolution the company need to consider the following:It could be closed by the business if it has lost the control over the companies. This provides freedom to the sole traders to close their company at any point of time and forany reason The records need to be maintained for the purpose of tax filing. The dissolving assets areand other realization aspects need to be disclosed. Cancellation of the license need to be done in accordance with the registered location.Tax liability for the current year need to be possessed by the company. It is necessary tonotify the local or state tax authorities. Need to keep the final record of the tax firms. This will help to save the trader from being incircle of accrued interest and creating extra burden ion business.Thus, it is required for the business to have control over the business activities to save them fromthe dissolution case. It will help the business to continue for a long period of time. The company has
managed to earn the required profit. Development and civil engineering department of the companyis performing better and it will help to m maintain the growing profit. Sorting, handling, receiving isdone for the marine disposal. Part-2For the inward investment the company have various sources of finance available, but the sourcedepends on how the target company gets the funds into their bags. Some of the options that theycan be given are:1.Funds repayment by banks funds i.e. in cash;2.Offer the investment as an Letter of Credit, where the target company will gets the fundsafter few day of purchase;3.Offer property on the shares bought;4.Give shares in the existing company so that the company which is been target will becomepart of the owned company;Source of finance:1.Term Loan from the bank2.Purchase and lease back3.SBA Loan;4.Leveraged buyout;5.Line of creditCost of Borrowings:1.Usually the Term loan from the bank offers the market rate + Libor, the Libor rate isapplicable in case of loan in terms of USD but if the loan is in local currency then the fundscan be available at the local market rate which may be range from 10 to 15% rate.2.Purchase and lease back, is the way where the company purchase one company and give thecontrol to the same company management so that they can run the business. For the saidfinancing the company charge lease interest from the company which can be financed atthe rate lower than the bank loans3.SBA loan: Usually the rates for SBA loans lies from 7.5% to 10.25%4.Leveraged buyout: This is the process where the private equity team buyout the obligationof the company and on the progress of the things the company takes the returns into theaccounts.5.Line of Credit: This facility is usually facilitates on the basis of rates that is available in themarket. So, the credit facility is given at a rate of minimum margin or at the flat rate. Usually,it is available at a rate of 2% p.a. But the funds are usually small and one have to opencouple of Line of credit so to facilitate the investment.Strategy for managing finance:All the companies mentioned above have a good market so there is no solvency for the company.For the purpose of investment the company should do the due diligence of the company and if thecompany is likely to take over the company then the company should identify the risk of investment,if the existing working capital of the company is funded enough then the company can invest viatheir own retained earning funds. If the risk is involved in terms of investment of financing then thecompany should involve the funds of the financial institutions so that the company's working capitalshould not be effected.
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