Hong Kong national security law (NSL)
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Apple Daily founder Jimmy Lai is currently serving a 20-month sentence for his roles in three unauthorised demonstrations. Photo: EPA-EFE

Hong Kong’s High Court rules that government restriction of Jimmy Lai’s Next Digital voting rights complies with national security law

  • Lai’s lawyers had urged the move so he could vote on his company’s liquidation, but authorities warned doing so could pose national security risk
  • The 73-year-old Apple Daily founder, now serving 20 months over three unauthorised demonstrations, faces two charges under national security law

Hong Kong’s High Court has ruled against jailed media tycoon Jimmy Lai Chee-ying in finding that the Security Bureau can restrict his voting rights as the major shareholder of Next Digital under the national security law.

But the court stopped short of saying whether Lai should be granted the limited right to vote only on the issue of winding up the media company, saying he should first make an application to the bureau.

Jimmy Lai asks court to restore his voting rights at Next Digital

Mr Justice Anthony Chan Kin-keung said the court was not in a position to conduct a national security risk assessment for his plan to wind up the company, which published the now-defunct Apple Daily newspaper, and Lai could come back for adjudication if the secretary for security disagreed with him on that application.

The security minister had exercised his power under Article 43 of the Beijing-imposed national security law in May to prohibit Lai from handling his 1.88 billion shares, or 71.26 per cent of the total issued, as well as the funds in the local bank accounts of three companies he owned.

Lai’s lawyers had urged the court to restore his voting rights on the Next Digital board so he could vote on liquidation, adding that this would not constitute “dealing with” the frozen properties under the security law.

But the authorities were concerned that he might use his vote to exercise control over the company and provide financial support to those who planned to endanger national security, or to divert the company assets overseas.

The action against Lai marked the first time authorities had invoked their new powers to go after the assets of a listed company on suspicion they could be related to the commission of a national security crime.

On Friday, the judge, who has been designated to handle national security law cases, agreed with Lai’s counsel that a shareholder’s voting right in a company was property right protected by the Basic Law, the city’s mini-constitution.

But Chan noted that such protection was not absolute. He said it was reasonably clear that one of the purposes of a freezing notice was to preserve the property in question so that a confiscation or forfeiture order might be obtained in the future.

Jimmy Lai has 1.88 million shares in Next Digital, which published the now-defunct Apple Daily newspaper. Photo: Dickson Lee

Such measures, he said, served a greater aim of fulfilling the new law’s stated purposes of preventing, suppressing and punishing acts endangering national security.

The judge said the law “came to be made at a critical moment in the history of Hong Kong” when the central authorities acted to “protect the city and plug the legal loophole in the lack of national security law” amid violent protests.

Chan noted that Lai was a man of considerable means who had been charged with serious offences on suspicion of endangering national security.

“It would be naive for the court to think that with the management vested in a board of directors ... the exercise of a voting right by a controlling shareholder would not possibly frustrate or hinder the freezing regime,” he continued in a 30-page judgment.

The judge said an unrestricted exercise of Lai’s voting rights might result in the depletion of the company’s assets, which would in turn diminish the value of shares that may be subject to a confiscation or forfeiture order in the future.


Hong Kong tabloid Apple Daily ceases operations after top executives arrested, assets frozen

Hong Kong tabloid Apple Daily ceases operations after top executives arrested, assets frozen

One example given was Lai’s authorised disposal of a building complex owned by Next Media Broadcasting, an indirect wholly owned subsidiary of the company, in Taipei on December 8, 2020. The consideration involved NT$1,750 million (HK$475.8 million).

Lai is facing a charge of colluding with foreign forces and a similar conspiracy charge in relation to two separate alleged plots authorities said were aimed at attracting international sanctions.

He is currently serving a 20-month sentence for his roles in three unauthorised demonstrations during the 2019 anti-government protests.

This article appeared in the South China Morning Post print edition as: Court rules against Jimmy Lai over voting rights