Reference no: EM133293245

X, Y and Z incorporate two companies to run restaurants, each company owning one restaurant. X,

Y and Z are the only shareholders in each company. Each shareholder holds 33% of the issued capital and there is an oral understanding between them that all shareholders will maintain their pro-rata percentage in each company. Each shareholder also has a 33% interest in the land on which the restaurants are located and this land is leased to the companies.

At the outset all shareholders are directors of the companies and relationships are friendly. X spends a great deal of time getting the restaurants operating. However, a year after business commences relationships start to break down and the following events occur:

1. X is removed as a director of both companies;

2. X is excluded from day-to-day administration of the companies and management thereof,

3. Y and Z establish a management service corporation of which they are the sole shareholders to provide management services to the two restaurant companies and fees are paid for these services; and

4. Y and Z propose a rights offering in each of the two restaurant companies of 1,000,000 shares at a discount of 25% from market value. X has no money to take up the offer and Y and Z subscribe for his shares. As a result, X's shareholding in both companies is reduced to 24%. If the rights offering had been at market value, he would have been diluted to 28%.

Does X have a remedy under the Corporations Act?

What specific remedies or orders should he ask the Court to make?