Kompieno (Pty) Ltd was a private company which carried on business in Francistown as a retailer of books. The company was the wholly-owned subsidiary of Kudu Ltd which carries on business in Gaborone. Kudu Ltd is a book publisher and the main supplier of books to Kompieno (Pty) Ltd.Kompieno (Pty) Ltd suffered a severe fall in profi tability, following which Kudu Ltd had to inject substantial capital in order to ensure the continuing solvency of the company. Despite these injections of capital, Kompieno (Pty) Ltd continued to suffer fi nancial diffi culties. In consequence, the company was placed under insolvent liquidation by the High Court in Francistown. Kudu Ltd has now received demand for payment from a number of Kompieno (Pty) Ltd’s creditors who argue that, as Kompieno (Pty) Ltd was the wholly-owned subsidiary of Kudu Ltd, the latter company is liable to pay the debts of its subsidiary in full.Required:Advise Kudu Ltd on whether or not it can be liable to pay the debts of Kompieno (Pty) Ltd. (10 marks)
