Using the power of securities laws to target a listed company for the first time may have an impact on investor sentiment in the city.

The Hong Kong authorities have frozen the assets of the jailed media tycoon Li Meimei, including all shares in his company Next Digital. This is the first time that a listed company has been attacked by the National Security Law of the Financial Center.

In a government statement, Hong Kong Security Service Director John Lee said that among the target assets are the local bank accounts of three Lai’s companies.

The statement was released after the market closed on Friday, stating that Mr. Li had issued a notice, “frozen in writing all shares of Next Digital Limited held by (Jimmy) Li Zhiying and the ownership of the property in three local bank accounts By him”.

Lai was sentenced to 14 months in prison for participating in an unauthorized assembly in a democratic protest in 2019.

Under a comprehensive new national security law promulgated by Beijing, he faces three charges, including collusion with foreign countries.

Actions were also taken against his property under the Security Law, which criminalized subversion, sedition, collusion with foreign forces and secession of the country, and possible life imprisonment.

The authorities’ decision to use the power of the law for the first time against Hong Kong listed companies may have an impact on investor sentiment.

According to government agencies, bankers and lawyers, since the law was promulgated last June, capital has fled to foreign countries including Canada.

Clamp

Beijing said it had imposed laws on the former British colonies to restore order after months of pro-democracy and anti-China protests in 2019.

However, critics say that the leaders of the Chinese Communist Party have used the law to suppress freedom and democracy activists, many of whom have been arrested and imprisoned and fled into exile.

Next Digital CEO Cheung Kim-hung told Apple Daily that Lai’s frozen assets have nothing to do with Next Digital’s bank account, and its operations and finances will not be affected.

The company’s employees pledged to continue to “fulfil their duties and maintain reports” in a statement posted on the Facebook page of the Next Digital union.

Next Digital CEO Cheung Kim-hung told Apple Daily that Lai’s frozen assets have nothing to do with Next Digital’s bank account, and its operations and finances will not be affected. [File: Isaac Lawrence/AFP]

According to documents from the Hong Kong Stock Exchange, Lai is a major shareholder of Next Digital. Based on Friday’s closing price, Lai holds 71.26% of the shares, valued at approximately HK$350 million (US$45 million).

The value of other “property” assets frozen by the authorities is unclear.

Next Digital runs the “Apple Daily”, the most influential democratic newspaper in Hong Kong, which has long troubled the Hong Kong and Chinese authorities.

Senior Hong Kong officials recently warned Apple Daily about its reports and talked about the possibility of introducing a “fake news” law. Critics say that this is all the content of the city’s continued repression of the media.

The Taiwan branch of Apple Daily said on Friday that it would stop issuing print editions, blaming the decline in advertising revenue and the more difficult business environment in Hong Kong related to politics.