The company was incorporated with 100,000 shares. Michan the majority shareholder holds 70,000 ordinary shares, his wife Audrene holds 20,000 ordinary shares and their friend Donna who is one of the instructors at the fitness club holds 10,000 non-cumulative preference shares. All three are directors and Audrene is also the company secretary.

Upon joining Fitness and More Limited, Donna signed a 'non-compete' contract with the company that she would not establish any business that provided similar services to that of Fitness and More Limited.

Trevor, one of the clients at the fitness club accidentally fell from a treadmill, while Donna was adjusting the speed of the treadmill he was on. He suffered a concussion and was hospitalized for three weeks. Trevor has since filed a law suit against Michan, Audrene, Donna and Fitness and More Limited.

No dividends have been declared for the past two years, but Donna insists that as a preference shareholder she is entitled to payment of dividends whether or not the directors declared dividends. She's also demanding that she be paid dividends in arrears for the past two years.

Donna's sister who is an attorney has registered a company to operate a gym. Donna who is not happy with Michan and Audrene, has started offering body building classes at the home she shares with her sister and is charging $1,500 per session. A number of Fitness and More clients have left the fitness club and are attending Donna's classes as it is much cheaper. Michan has found out about Donna's classes and wants to take legal action against her.

Advise Fitness and More Limited on all legal issues arising from the facts provided.