How does a holding company like Berkshire access the profits of the companies it wholly owns?

FDa65rdk

Can a holding company simply take the profits whenever they want and use them as they please or does it have to take a formal route e.g. providing a certain amount of notice so the management of the subsidiary company can plan accordingly?

Is the holding company required to publish the details of where it accessed profits and in what amounts?

I suppose a prime example is Berkshire Hathaway and GEICO.

Would GEICO have to publish accounts and, if so, would any profits that were used by Berkshire Hathaway have to be published as well – either in GEICO’s accounts or in Berkshire’s?

Thanks

cwep2

Berkshire Hathaway is a public company, so produces results/accounts which become public, so that's one place you will see them.
As for the privately held companies they own, they will at least want to follow standard accounting rules, but what gets published is way more limited. But to answer your question, they can pretty much take profits when they want, just like in the UK the director/owner of a privately held company can issue themselves a dividend pretty much when they like from profits/cash held within the company.
They will usually choose to do this in a tax efficient way - privately held companies still pay tax on profits and some ways of extracting cash from companies have different tax implications, and that is true for the holding company as well, so in this case the ultimate owners (eg BH) would usually choose the way and the timing of taking cash/profits out of the businesses at times that are optimal for them. One key difference here, is that normally the company will decide what's optimal solely for it's own (tax) position, in this case where one owner owns the whole company they will also take into account their own (tax) position. In a similar way that a wholly owned company by one person might choose to take a dividend in the next tax year because it is better for their own tax affairs, BH might choose to leave money in a certain company for many years, or offset losses in one company with profits in another.

FDa65rdk

Thank you!

Sorry for the late response.