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Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies [Text Block]

19.

Commitments and Contingencies

(i) Capital Commitments

As of December 31, 2016 and March 31, 2017, the Company had the following contracted capital commitments:

			December 31,			March 31,
			2016			2017
	For construction of buildings	$	2,225,978		$	2,300,606
	For purchases of equipment		451,063			229,651
	Capital injection to Dalian BAK Power and Dalian BAK Trading ^Note		9,895,996			9,895,996
		$	12,573,037		$	12,426,253

Note:

Initially, BAK Asia was required to pay the remaining capital within two years, of the date of issuance of the subsidiary’s business license according to PRC registration capital management rules. According to the revised PRC Companies Law which became effective on March 2014, the time requirement of the registered capital contribution has been abolished. As such, BAK Asia has its discretion to consider the timing of the registered capital contributions. On April and May 2017, Dalian BAK Power received $9,495,974 injected from BAK Asia.

(ii) Litigation

On July 7, 2016, Shenzhen Huijie Purification System Engineering Co., Ltd (“Shenzhen Huijie”), one of the Company’s contractors, filed a lawsuit against Dalian BAK Power in the Peoples’ Court of Zhuanghe City, Dalian for the failure to pay pursuant to the terms of the contract and entrusted part of the project of the contract to a third party without their prior consent. The plaintiff sought a total amount of $1,223,858 (RMB8,430,792), including construction costs of $0.9 million (RMB6.3 million), interest of $0.03 million (RMB0.2 million) and compensation of $0.3 million (RMB1.9 million), which the Company already accrued for as of December 31, 2016. On September 7, 2016, upon the request of Shenzhen Huijie, the Court froze Dalian BAK’s bank deposits totaling $1,223,858 (RMB8,430,792) for a period of one year.