Saw a truck today on the way to work. Painted on the side of the cab was “Sil-Mar Transport, Pierrefonds QC”, and, elsewhere, “<7-digit number> Canada Inc”.
A numbered company. This one looks like it might be a holding company, but why just number it? I have the impression that numbered companies are vaguely disreputable, that numbering a corporation is an attempt to make it more difficult for the public to remember, trace, and investigate it.
So, what is the purpose of numbering a corporation?
I believe all Canadian corporations are assigned numbers.
But why refer to the corporation only by its number?
Many large corporations are actually an affiliated conglomeration of dozens, perhaps, hundreds, of incorporated entities. Why do they exist? Tax avoidance, regulatory compliance, joint ventures … there are probably dozens of reasons. Many of these entities have no public face, offer no goods or services to the public, whatever. Then there might be no point to having a traditional name at all. Just use the number the corporation regulation agency assigned. I don’t know that it is necessarily for some nefarious purpose. After all, referring to the corporation by number might actually make it easier to access public records.
Just to add to the last post–“Many large corporations are actually an affiliated conglomeration of dozens, perhaps, hundreds, of incorporated entities” AND unincorporated entities (limited liabiltiy companies, partnerships, etc.). And you’re right, there are lots and lots of good reasons to have a large number of entities, and then things change and the company decides to pare down its behemoth structure.
One question–who do you believe killed JFK?
Yes, thanks, TaxGuy. I suppose I should have said “many large companies … .”
Whay would some of the reasons for having so many components to an organization be?
I’m Canadian–I have no opinion on the matter. 
There are lots of reasons, some of which I touched on above.
I’ll just give you one specific example under the heading of “regulatory compliance” –
The Commonwealth (i.e., State) of Virginia will not license any company to provide telephone service within Virginia unless it is incorporated in Virginia. So any company that is organized in a different state (often Delaware, if it is a national company) has to create a Virginia subsidiary that is eligible to apply to the Virginia State (yes, “State” not “Commonwealth”) Corporation Commission for authorization to provide telephone service.
… umm, sorry, didn’t finish my example.
In such a case, say there’s a American Worldwide Communications Corp., incorporated in Delaware and headquartered in Los Angeles, wants to provide service in Virginia. National-American-Continental Communications Corp. then creates a Virginia subsidiary, say, NACC of Virginia Inc., which is then licensed by the V.S.C.C. Now, National-American-Continental Communications Corp. provides its services nationwide and advertiste its brand as “National-American-Continental.” It probably doesn’t make sense to offer its services under the name “NACC of Virginia” just in Virginia. So, NACC of Virginia Inc., while a legitimate corporation created for a legitimate reason, is probably going to be an entity only in name, for the most part. The actual services will be provided by National-American-Continental Communications Corp. of Los Angeles, under the name “National-American-Continental.”
If this were a Canadian case, then when the parent company established the subsidiary, then it might decide that it doesn’t even have to bother coming up with a name like “NACC of Virginia,” and just use the number issued by the corporation agency.
Sunspace, I think the feeling of disreputability comes from two things. First, there is an unconscious association with Swiss numbered bank accounts, which are associated with great secrecy and, by extension, some shady activities like dictators hiding their ill-gotten gains.
As well, when the news media is tracking money in relation to financial scandals, it’s quite common to come up against a numbered company, for all the reasons the others have given - they’re very common in North American business dealings, so it’s not a surprise that in a complex financial transaction, numbered companies will be part of the money chains. The media then refer to it as a “numbered corporation controlled by X”, where X is one of the players in the financial scandal. Since that’s where most people see references to numbered companies, they tend to associate them with shady dealings.
But as the others have noted, there’s no secrecy. If you know the number of the company, the appropriate provincial or federal corporate registry will give you all the details about the public filings of the corporation, including the directors - and that’s how the media usually find out that a numbered company “is controlled by X” in the above example. They leave you with the impression that it was by hard gumshoe investigation, but all it meant was the reporter phoned the corporate registry (or checked it on-line, nowadays). Doesn’t matter if it’s 123456789 Canada Inc., or Big Corporation Inc. - the same rules apply, including the right of the public to access the records.
Here’s a tax example:
Say a company organized as a corporation currently has no operations in Texas and then one day it decides to start doing business in Texas. If the company either (a) operates in Texas directly or (b) forms a new corporation or limited liability company to operate in Texas, then either the company (in (a)) or the new corporation or LLC (in (b)) will be subject to the Texas franchise tax (which is essentially an income tax on businesses).
So, here’s what the out-of-state corporation does: it forms a Texas Limited Partnership to operate the business, a Delaware LLC to be the general partner, and another Delaware LLC to be the limited partner. Both LLCs are 100% owned by the out-of-state corporation, and the general partner is allocated a very small percentage of the profits of the limited partnership, with the bulk of the profits going to the limited partner. The effect of doing this structure is that only the portion of the limited partnership’s profits that go to the general partner (which will be 1% or less) is subject to Texas franchise tax.
In Texas tax circles the above is just called “the Texas franchise tax structure” because it’s so common, and the legislature talks about closing the loophole every year.
So–back to the main point of the thread-- a company that decided to operate in Texas just created three new entities to take advantage of a tax loophole.
Here’s a Canadian example: many US companies that operate in Canada hold the Canadian operating assets in an NSULC–a Novia Scotia Unlimited Liability Company–because an NSULC is treated as a passthrough entity for both Canadian and US tax purposes, which has various tax benefits.
Wow! What a can of worms I opened. It seems clearer now. Thanks, everyone.
It’d be nice to have a big online database of these things, so that you could just click on a corporation and then follow the ownership and control links.
I think I’m going to do a little digging chez our governments…
Actually, I believe there’s usually a simpler reason (for Canada anyway, don’t know if it holds true for the US). IIRC if you want to register your company with a name instead of just a number, you have to pay extra for a search to see if the name is already registered by another company. Smaller businesses don’t usually want to pay the extra, so just register under the number. They can then operate legally as “1234567 Corp, doing business as John’s Speedy Plumbing”. The downside is that their right to the “John’s Speedy Plumbing” name is very limited.