While the appeals court struck down one conviction, it upheld another, for participating in the August 18 demonstration, which drew an estimated 1.7 million people -- one of the largest gatherings during the height of democracy protests that have since been crushed by Beijing.
The group was convicted in 2021 of organising and taking part in an unauthorised assembly, and later appealed.
According to Monday's ruling, the suggestion that the seven were at the front of the procession was "not a realistic or suitable substitute for evidence that they were involved in its organisation".
But the court upheld their participation conviction, as "they each knew they had embarked on an activity which was unauthorised".
In addition to Lai -- the founder of now-defunct Apple Daily -- the group includes veteran unionist Lee Cheuk-yan, prominent leftist Leung Kwok-hung, rights lawyer Albert Ho, former lawmaker Cyd Ho, Civic Party founder Margaret Ng and Democratic Party founder Martin Lee.
The seven are among the most recognisable faces of Hong Kong's now-quashed democracy movement.
Their conviction in 2021 was seen as a blow to the right to peaceful assembly in the city, coming after Beijing imposed a sweeping national security law that effectively silenced dissent.
The August 18 rally was peaceful, and during the initial trial, police told the court that no violence was observed nor were any arrests made.
Ng told reporters they would study the judgement before deciding their next move.
Three among the seven -- Margaret Ng, Martin Lee and Albert Ho -- were granted suspended sentences, while the other four had finished serving their terms, which were between eight to 18 months.
However, Jimmy Lai, Lee Cheuk-yan, Leung Kwok-hung and Albert Ho are still in remand over three separate cases in which they are accused of national security crimes.
So far, 260 people have been arrested under the national security law, with 79 of them convicted or awaiting sentencing in Hong Kong.
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Democracy in the 21st century at TerraDaily.com
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