Next Digital to go into liquidation as board quits

Apple Daily's parent company Next Digital has announced that all directors had resigned and is going into liquidation. In a statement, the company said four directors, including non-executive director and chairman Ip Yut-kin, independent non-executive directors Louis Gordon Crovitz, Mark Lambert Clifford and Elic Lam Chung-yan, had tendered their resignations all with effect as of 5 September 2021. 

The statement included an open letter from four directors to the public. In it, they explained the trading of shares in Next Digital have been suspended since 17 June 2021. On the same day, two members of the board of directors were arrested and charged with violating the National Security Law, as well as the Hong Kong Secretary for Security cited the National Security Law to freeze company bank accounts, including those for Apple Daily newspaper in Hong Kong and its digital operations. As such, the company believed that it could no longer legally pay Apple Daily’s staff, including reporters, and the company was also banned from paying costs of doing business such as buying ink and keeping the electricity on.

After the series of events, Apple Daily ceased operation on 24 June. To protect that interests of shareholders, creditors, employees and other stakeholders, Next Digital said it would go into an orderly liquidation, hoping that it would be allowed by the Hong Kong government to authorise payments that directors were banned from approving, including for creditors and for former staff.

As for its publications in Taiwan, Next Digital said several parties had expressed interest in acquiring the operation of Apple Daily there. 

In May 2021, the Hong Kong government cited the National Security Law to freeze founder Jimmy Lai’s bank accounts and deny him the right to vote his 71% of the shares in the company. After the incident, there was a significant increase in the purchase of shares. 

Also in June, the Hong Kong police said that the publication of about 30 articles were entered as evidence of conspiracy to collude with foreign forces and external elements.

In the current statement, Next Digital claimed that the Hong Kong government had not indicated which articles published by Apple Daily allegedly violated the National Security Law. It also claimed that this uncertainty created a climate of fear, resulting in many resignations among the remaining staff at the company in Hong Kong - including those responsible for the regulatory compliance duties of a publicly traded company. The outgoing directors also said in the letter, "We are confident that the company’s founder, majority shareholder and former chairman Lai would join us in these expressions of gratitude (for shareholders, advertisers, staff and readers) if he were able to communicate from his prison cell."

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