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”.