Lai, an ardent critic of Beijing, would be the highest profile person charged under the sweeping new law imposed on the Chinese-ruled city in June.
He was due to appear in court on Saturday, according to Apple Daily, a popular tabloid known for its feisty and critical coverage of China and Hong Kong.
The security law, which punishes what Beijing broadly defines as secession, subversion, terrorism and collusion with foreign forces with up to life in jail, has been condemned by the West and human rights groups as a tool to crush dissent in the semi-autonomous, Chinese-ruled city.
Authorities in Hong Kong and Beijing say it is vital to plug gaping holes in national security defences exposed by months of sometimes violent anti-government and anti-China protests that rocked the global financial hub over the last year.
“The goal is to hold Jimmy Lai, and shut Jimmy Lai up,” Mark Simon, an associate of Lai, told Reuters.
Hong Kong police did not immediately respond to a request for comment.
The publishing tycoon is one of the financial hub’s most prominent democracy activists, while his Next Media group is considered one of the key remaining bastions of media freedoms in Hong Kong.
Tensions between China and the United States have escalated in recent weeks as Washington accuses Beijing of using the security law to trample wide-ranging freedoms guaranteed when the former British colony returned to Chinese rule in 1997.
Authorities have intensified a crackdown on opposition forces in the city, dismissing lawmakers from the legislature, conducting widespread arrests and jailing high-profile democracy activists such as Joshua Wong.
Lai was denied bail earlier this month following his arrest on a separate charge of fraud related to the lease of a building that houses his Apple Daily, an anti-government tabloid.
He was arrested in August when about 200 police officers swooped on his offices. Hong Kong police later said they had arrested nine men and one woman for suspected offences including “collusion with a foreign country/external elements to endanger national security, conspiracy to defraud” and others.
The tycoon had been a frequent visitor to Washington, where he has met officials, including Secretary of State Mike Pompeo, to rally support for Hong Kong democracy, prompting Beijing to label him a “traitor”.
Reporting by Twinnie Siu and Greg Torode in HONG KONG; Writing by Anne Marie Roantree; Editing by Sam Holmes, Lincoln Feast and Michael Perry
FILE PHOTO: Media mogul Jimmy Lai Chee-ying, founder of Apple Daily arrives at West Kowloon Courts to face charges related to an illegal vigil assembly commemorating the 1989 Tiananmen Square crackdown, in Hong Kong, China October 15, 2020. REUTERS/Tyrone Siu