Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies [Text Block]

19. Commitments and Contingencies

(i) Capital Commitments

As of December 31, 2016 and September 30, 2017, the Company had the following contracted capital commitments:

		December 31,		September 30,
		2016		2017
For construction of buildings	$	2,225,978	$	2,461,807
For purchases of equipment		451,063		169,875
Capital injection to Dalian BAK Power and Dalian BAK Trading Note		9,895,996		400,000
	$	12,573,037	$	3,031,682

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 $1,266,855 (RMB8,430,792), including construction costs of $0.9 million (RMB6.3 million), interest of $30,972(RMB0.2 million) and compensation of $0.3 million (RMB1.9 million), which the Company already accrued for as of September 30, 2016. On September 7, 2016, upon the request of Shenzhen Huijie, the Court froze Dalian BAK’s bank deposits totaling $1,266,855 (RMB8,430,792) for a period of one year. Further on September 1, 2017, upon the request of Shenzhen Huijie, the Court froze the bank deposits for another one year until August 31, 2018. On June 30, 2017, according to the first instance, the court ruled that CBAK Power should pay the remaining contract amount of RMB6,135,860 (approximately $0.9 million) claimed by Shenzhen Huijie as well as other expenses incurred including deferred interest, discounted charge on bills payable, litigation fee and property preservation fee totaled $0.1 million. On July 24, 2017, Dalian CBAK Power filed an appellate petition to the Peoples’ Court of Dalian to defend the adjudication dated on June 30, 2017.