Karachi: The Securities and Exchange Commission of Pakistan (SECP) has sanctioned a significant corporate restructuring initiative involving PIA Holding Company Limited (PIAHCL) and Precision Engg Comp (Private) Limited (PECPL), effective from May 1, 2025. This decision marks a pivotal development in the scheme of arrangement under the Companies Act, 2017, impacting public sector companies owned by the Federal Government.

According to information available from the Pakistan Stock Exchange (PSX), the approval facilitates the separation and demerger of the Precision Engineering Complex (PEC) from PIAHCL, transitioning it into PECPL. This strategic move is aimed at enhancing operational efficiency, streamlining business processes, and strengthening management oversight. The scheme promises to enable focused development and business expansion, improving overall performance and asset management.

The restructuring plan, initially approved by the Government of Pakistan on May 1, 2025, involves a comprehensive carve-out of the PEC undertaking, including all related assets and liabilities. The SECP's order, dated October 21, 2025, directed the convening of an Extra-ordinary General Meeting by PIAHCL, where significant amendments to the scheme were approved. These amendments, primarily proposed by the Ministry of Defence, address the release and replacement of PEC Land in connection with financial obligations.

The financial implications of the scheme include PECPL assuming pension liabilities amounting to Rs. 2.9 billion for 259 retired PIAHCL employees, alongside Rs. 1.1 billion for the future pension and provident fund liabilities of 251 current employees. Despite minor discrepancies in employee numbers, the intention to transfer all active and retired employees to PECPL remains intact.

The SECP's endorsement follows meticulous compliance with statutory and legal requirements, including the submission of financial statements and necessary approvals from creditors. Notably, the National Bank of Pakistan and Bank of Punjab have provided the required consents, facilitating the scheme's progression.

The approval by the SECP underscores the strategic importance of this restructuring for the companies involved, with an emphasis on ensuring compliance with ongoing statutory and regulatory directives. The sanction is contingent upon adherence to legal provisions and is without prejudice to any further actions by the SECP for potential non-compliance or legal proceedings.