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Commitments and Contingencies

3 Months Ended

Dec. 31, 2016

Commitments and Contingencies [Text Block]

19.

Commitments and Contingencies

(i)

Capital Commitments

As of September 30, 2016 and December 31, 2016, the Company had the following contracted capital commitments:

			September 30,			December 31,
			2016			2016
	For construction of buildings	$	3,302,524		$	2,225,978
	For purchases of equipment		469,542			451,063
	Capital injection to Dalian BAK Power and Dalian BAK Trading ^Note		9,895,996			9,895,996
		$	13,668,062		$	12,573,037

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.

(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 $1,213,989 (RMB8,430,792), including construction costs of $0.9 million (RMB6.3 million), interest of $30,689 (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 $1,213,989 (RMB8,430,792) for a period of one year.