The reason that you must bury your public company's shares is to reduce your company's float. Your investor relations costs will be lower if your public company has a lower float. [See my article on the proper use of shares.] fxcm.my/cara-beli-saham-cfd/ The buried shares will be deducted from the float, and the remaining amount is the effective float. You want to get the effective float as close to zero as possible. If your effective float is zero, you need not find buyers for your float because there are no shareholders selling their stock in your company. It is obvious that this is the best situation. If you want your company to be successful in every aspect, I recommend that you structure the float of your company this way.
Speculators are not investors
American stock buyers, on the whole, are speculators, not investors [http://www.iht.com/articles/529443.htm]. Stocks are bought with the intention of selling them quickly at a profit. Even the U.S. Government realizes that speculation doesn't lead to economic growth. Stock buyers who are willing to hold on to their shares for a minimum of one year pay less tax than those who trade in the Market quickly and sell their stocks. The American Government's tax incentive hasn't altered the speculative nature of the U.S. Market, because long term investors are consistent money losers. I've often wondered why these long-term investors continue to buy and hold shares in such a manner?
Avoiding Having Your Shares In the Market
I have been involved in the North American stock market for over 20 years and can confirm that professionals make more money by selling shares short (betting on the fall of the share price or the bankruptcy of the company) than by purchasing shares. There are over twenty ways to short sell stocks that are not listed in textbooks. I have written an article on shorting shares that includes 24 ways. The only effective defense to short selling is to ensure that the Depository Trust Company (DTC) in New York doesn't have any of your company's shares in their possession.
When most people buy shares, they leave them "in street name" rather than taking possession of the share certificates. In street name, they are simply turned over to DTC. Short sellers "borrow", or rely on street stock in some other way, to sell nonexistent stocks into the company market. Public short sellers anticipate paying back the "borrowed shares" at a much lower price when the stock crashes. Professional short sellers never expect to buyback the nonexistent shares and legally avoid U.S. taxes on their profits in doing so. If the shares are not there to be borrowed, your company can't be sold short.
If your company can keep your shares away from the DTC, by having all your shareholders demand physical delivery of their share certificates, your company is said to have a Cash Market in its stock. Few companies bother or understand the dangers they run from short sellers. Brokerage firms and DTC try to make it as difficult as possible to create Cash Markets in any stock.
Insider shares are buried
The insiders must "bury" their share certificates. All insiders must agree to a Pooling & Vaulting Agreement. All the insider share certificates, by far the largest percentage of stock in your company, are placed in a bank safe deposit box or other repository. To open the safe deposit box, at least two insiders designated by your company must be present. The result is these shares can't be sold and, since they aren't held by the DTC, short sellers can't use them. You must add your newly issued shares or shares acquired with your existing shares to your safe deposit or other repository when you acquire them. This policy ensures that your float can't increase. No one can use these shares to short sell your stock. You are guaranteeing what few companies ever achieve, total control of your stock issue.
Keep Your Float Private
Stopping the American public shareholders from selling their shares (the float) in your public company is more difficult. I believe it can be done. You must eliminate the potential loss for your shareholders. You must pay them to keep their shares. And, you must educate them to the fact that their greatest profit will be realized when the insiders sell their shares at the time of the company sale or merger with a larger company. If they know that the insiders have agreed not to sell, they're far more likely to go along with the program, too.
Your public shareholders can avoid loss by selling half of their position when the public company's share price doubles over what they paid for their shares. The shareholder has his risk capital returned and now has a cost-free investment in your public company. His original risk capital is now available for another investment. If you do this with the first buyers of an equity, the float is reduced by 50%. The Effective Float then equals half the float. If the second group of buyers follow this practice, the Effective Float is 25% of the float. Your company's Investor Relations costs have been reduced by 75%. These funds can be used to expand the company.