A Hong Kong appellate court has quashed Jimmy Lai Chee-ying’s fraud conviction for operating a consultancy office from his now-defunct tabloid-style newspaper, Apple Daily, finding that the prosecution failed to prove the jailed former media boss had made a “false representation”.

In a judgment delivered on Thursday, the Court of Appeal ruled that the prosecution had failed to prove that Lai and another executive at Apple Daily had committed the actus reus, or the criminal act, and that the lower court had failed to consider “certain matters relevant to [their] state of mind”.

Lai, 78, had stood trial on two counts of fraud after being accused of concealing the operations of Dico Consultants at Apple Daily’s Tseung Kwan O headquarters for more than two decades in breach of its land lease conditions.

Lai was sentenced to five years and nine months in jail and fined HK$2 million (US$15.6 million). Initially slated for release as early as June, he is now serving a 20-year national security sentence.

Wong Wai-keung, 61, executive at Next Digital, the paper’s parent company, was jailed for 21 months.

During the initial trial, the court heard that terms for Apple Daily’s land lease included a ban on using office space for purposes other than “publishing and printing of newspapers and magazines and ancillary services”.