SECP Clears PIA Holding Company’s Demerger of Precision Engineering Complex

PIA Holding Company Limited (PIAHCL) has received regulatory clearance to carve out its Precision Engineering Complex (PEC) into a separate entity owned by the Pakistan Air Force, after the Securities and Exchange Commission of Pakistan (SECP) sanctioned a detailed Scheme of Arrangement between PIAHCL and Precision Engg Comp (Private) Limited (PECPL). In a filing to the Pakistan Stock Exchange, PIAHCL submitted SECP’s order approving the scheme under Sections 279–283 and 285(8) of the Companies Act, 2017. The approval allows the two federally owned companies to proceed with the restructuring arrangements submitted to the Commission on November 4, 2025. Under the scheme, PEC,  a business unit of PIAHCL, along with all its assets, liabilities, contracts, rights, obligations and employees, is being carved out of PIAHCL and transferred to PECPL with effect from May 1, 2025. The valuation has been determined by a federal ministerial committee. SECP’s order notes that the demerger is intended to: The federal cabinet had already approved the transfer of PEC from PIAHCL to PECPL (a designated Pakistan Air Force entity) in its decision of May 1, 2025, followed by directions from the Ministry of Defence to PIAHCL and the Air Force. Following SECP directions, PIAHCL convened an extraordinary general meeting (EOGM) on October 25, 2025, where shareholders representing 96.02% of Class A shares and 97.50% of Class B shares voted in favour of the scheme, after incorporating an amendment to Article 20.1 related to the release of PEC land from Musharaka assets tied to a syndicated Islamic facility and sukuk issue. Meetings with secured creditors were also held. SECP’s order records that PIAHCL subsequently obtained no-objection certificates from both the National Bank of Pakistan and the Bank of Punjab syndicates. PECPL, which has no secured creditors, held its own EOGM the same day and unanimously approved the scheme, including the amended Article 20.1. The scheme covers the transfer of all PEC-related assets and obligations, including significant employee liabilities. According to the Ministry of Defence’s letter cited in the order, PECPL will assume: Terms and conditions for both active and retired PEC employees will remain the same as under PIAHCL. SECP sought clarification after employee headcounts in annexures differed from earlier cabinet documents; the companies confirmed that all active PEC employees and all obligations relating to retired PEC staff will be transferred to PECPL, with updated lists reflecting resignations and deaths around the effective date. SECP concluded that all legal and procedural requirements had been met, including board resolutions, member and creditor approvals, supplementary financial statements, and supporting documentation. The order notes that the sanction is based on information provided by the companies and is without prejudice to any future action if non-compliance comes to light, or to any court proceedings.