HK govt appoints inspector to probe Next Digital

The Hong Kong government appointed on Wednesday (July 28) an inspector to investigate the affairs of Next Digital, invoking the power conferred under the Companies Ordinance.

Speaking to the media, Financial Secretary Paul Chan Mo-po said that he had appointed Clement Chan Kam-ying as the inspector after reviewing the facts and circumstances in relation to the company's affairs and all other available information.

"It appears to me that there are circumstances suggesting the existence of the state of affairs referred to in section 841(2) of the ordinance in relation to Next Digital, including, among others, that Next Digital has been run in a manner unfairly prejudicial to the interests of its shareholders and creditors; that the officers of Next Digital have used the listed company to conduct unlawful activities and have themselves (been) involved in various alleged fraud offenses and misconduct closely associated with the affairs of Next Digital; that the officers of Next Digital have breached their fiduciary duties and failed to observe proper standards of care in the performance of their duties; and that the governance of the company has seriously fallen short of that expected of a listed company."

Chan pointed out that it was in the public interest to invoke the relevant statutory power to appoint an inspector to probe the company's affairs, adding that the alleged criminal offenses of the company's senior officers are of particular concern.

"All the circumstances give rise to grave concerns on whether there was serious mismanagement on the part of Next Digital, in particular the involvement of its officers in the alleged criminal offenses and/or misconduct, the officers' failure in their duty to prevent this from happening, and whether the officers of Next Digital had taken reasonable and adequate steps to protect the interests of its shareholders and creditors."

Chan noted that the events relating to Next Digital that are of special concern include the charges laid against its senior officers and three subsidiaries in end-2020 and mid-2021 for serious offenses under the National Security Law.

This raises the question of whether the affairs of Next Digital had been conducted by its officers in pursuit of their personal interests to the detriment of the public shareholders, he added.

(Source: China Daily)