The Securities and Exchange Commission of Pakistan (SECP) has approved the demerger of the Precision Engineering Complex (PEC) from PIA Holding Company Limited (PIAHCL), clearing the way for its transfer into a separate corporate entity owned by the Pakistan Air Force.
In a formal filing to the Pakistan Stock Exchange, PIAHCL confirmed that the SECP has sanctioned a detailed Scheme of Arrangement between PIAHCL and Precision Engg Comp (Private) Limited (PECPL) under Sections 279 to 283 and 285(8) of the Companies Act, 2017. The approval allows the restructuring plan, initially submitted to the regulator on November 4, 2025, to move forward.
Under the approved scheme, PEC, previously operating as a business unit within PIAHCL, will be carved out along with all its assets, liabilities, contracts, rights, obligations, and employees. These will be transferred to PECPL with effect from May 1, 2025. The valuation of the transferred business has been carried out by a federal ministerial committee.
Regulators noted that the demerger is aimed at improving operational efficiency, streamlining business processes, and strengthening management oversight. By operating as a standalone entity, PEC is expected to build a distinct identity, focus on its core engineering and manufacturing functions, and pursue expansion plans more effectively. The separation is also intended to allow clearer asset management and a fairer allocation of risks and resources between the two entities.
The move follows earlier approval by the federal cabinet, which sanctioned the transfer of PEC to PECPL, a designated Pakistan Air Force entity, on May 1, 2025. The Ministry of Defence subsequently issued directions to both PIAHCL and the Air Force to proceed with the restructuring.
To comply with regulatory requirements, PIAHCL convened an extraordinary general meeting on October 25, 2025. Shareholders representing more than 96 percent of Class A shares and over 97 percent of Class B shares voted in favour of the scheme. The approval followed an amendment to Article 20.1, addressing the release of PEC land from Musharaka assets linked to a syndicated Islamic financing facility and sukuk issue.
Meetings were also held with secured creditors, and no-objection certificates were obtained from syndicates led by the National Bank of Pakistan and the Bank of Punjab. PECPL, which has no secured creditors, held its own extraordinary general meeting on the same day and unanimously approved the scheme.
A key aspect of the demerger involves employee obligations. PECPL will assume pension liabilities of Rs2.9 billion related to 259 retired employees and future pension and provident fund liabilities of Rs1.1 billion for 251 active employees. Employment terms and benefits will remain unchanged.
SECP concluded that all legal and procedural requirements had been met, while noting that its approval is based on information provided and does not preclude future action in case of non-compliance.
