28th July 2021 – (Hong Kong) The Financial Secretary Paul Chan appointed Clement Chan & Co. as an inspector to investigate Next Digital under the Companies Ordinance. After reviewing relevant facts and information, it is believed that the Next Digital incident had endangered shareholders.
Chan said that Next Digital has been involved in illegal activities and a number of fraudulent and improper conduct. Several cases are worthy of attention, including the announcement that the company has sufficient liquidity and sufficient cashflow for 18 months of operation. However, after the Security Bureau has frozen HK$18 million in less than a week, it subsidiary business announced that it will be terminated. Chan also said that Next Digital had failed to announce its annual results earlier and disclosed for the first time that it had repaid a HK$150 million loan to its major shareholder Jimmy Lai but the loan itself is not expiring yet, which may be seen as an action to deceive creditors. There is also a suspected fraud on the company’s land.
In addition, he said that senior staff of a subsidiary of Next Digital were charged under National Security Law, which raised doubts about whether the company’s affairs were handled in the interests of senior staff and the public suffered losses or whether there was mismanagement.
In order to prevent mishaps from happening, he believes that it is necessary to appoint an inspector to investigate because of the public interest. He emphasised that Hong Kong attaches great importance to maintaining the system and needs to maintain a good reputation. It is extremely important for Hong Kong companies and listed companies to abide by high-quality management. It is necessary to investigate whether it has unfairly harmed the interests of creditors and whether creditors and senior personnel have personal interests in handling the company’s affairs that have caused public shareholders to suffer losses, whether the company has been involved in improper conduct, whether full and immediate disclosure has not been made, whether there is failure to perform the responsibility or negligence, whether the repayment to the former chairman of Next Digital is true, whether the governance of the listed company is healthy, whether the government’s application for disqualification of company directors is in the public interest, etc., and the inspector is required to submit a report within six months for government consideration.
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