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China BAK Battery, Inc. (Parent Company)
 12 Months Ended
Sep. 30, 2013
China BAK Battery, Inc. (Parent Company) [Text Block]
23.

China BAK Battery, Inc (Parent Company)

   
   
 

Under PRC regulations, Shenzhen BAK, BAK Electronics and BAK Tianjin and BAK Dalian (“the PRC subsidiaries”) may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC GAAP. In addition, the PRC subsidiaries are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory general reserve until the balance of the reserves reaches 50% of their registered capital. The statutory general reserves are not distributable in the form of cash dividends to the Company and can be used to make up cumulative prior year losses, if any, and may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings, or by increasing the par value of the shares currently held by them, provided that the reserve balance after such issue is not less than 25% of the registered capital. As of September 30, 2012 and 2013 additional transfers of $86,789,695 and $86,958,843 were required before the statutory general reserve reached 50% of the registered capital of the PRC subsidiaries. As of September 30, 2012 and 2013, $7,786,157 had been appropriated from retained earnings and set aside for statutory general reserves by the PRC subsidiaries. BAK Tianjin did not have after-tax net profits since its incorporation and therefore no appropriation was made to fund its statutory general reserve as of September 30, 2012 and 2013.

   
 

As of September 30, 2012 and 2013, the amount of restricted net assets of the PRC subsidiaries, which may not be transferred to the Company in the forms of loans, advances or cash dividends by the subsidiaries without the consent of a third party, was approximately 5% and nil of the Company's consolidated net assets as discussed above.