The reason that you must bury your public company's shares is to reduce your company's float. The lower your public company's float, the lower your investor relations cost. [See my article The Proper Use of Shares.] full article The buried shares will be deducted from the float, and the remaining amount is the effective float. Your goal is to reduce the effective float to as near 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. I suggest that if you want your public company to succeed in all aspects, you may want to structure your company's float like this.
Speculators, Not Investors
American stock buyers, on the whole, are speculators, not investors [http://www.iht.com/articles/529443.htm]. They buy stock with the hope of quickly selling it at a profit. Even the U.S. government realizes that speculating does not 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 always wondered why long-term investors buy and hold stocks in this manner.
Avoiding Having Your Shares In the Market
My over 20 years involvement in North American stock markets have proven to me that Market professionals make more money selling stocks short (betting that the price of the shares will go down and the company will go bankrupt) than they do by buying shares. The textbooks only list one of over two dozen of ways that professionals use to sell short stocks. (I have written a short selling article that lists twenty-four ways to short shares.) It is the only way to effectively defend against short selling. Make sure that your company shares are not in possession of the Depository Trust Company in New York.
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 otherwise rely on the existence of street stock to sell nonexistent shares into the company's market. Public short sellers expect to pay the "borrowed" shares back at the much lower cost when the stock collapses. Professional short sellers do not expect to be able to legally buy back the shares that aren't there and avoid paying U.S. tax on their profits. If the shares are not there to be borrowed, your company can't be sold short.
If you can prevent your shares from being sold on the DTC by having your shareholders insist that they receive their certificates in person, then your company has a Cash Market. 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.
Burying Insider Shares
The insiders must "bury" their share certificates. To do so requires that all the insiders agree to a Pooling and 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. At least two designated insiders must be present to open that safe deposit box. These shares cannot be sold, and short sellers are unable to use them, as they're not held by DTC. 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 prevents your float from increasing. Nor can anyone use those shares to sell short 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 your shareholders potential for loss. You must pay them to keep their shares. You must also educate them on the fact that they will make the most money when insiders decide to sell their shares during a company merger or sale. If they know that the insiders have agreed not to sell, they're far more likely to go along with the program, too.
If the share price of your public company doubles what you paid for them, then half their stake can be sold to avoid a loss. 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 the initial buyers of a stock do it, you have reduced the float by 50% and the Effective Float is half of the float. If the second group follows this practice, then the Effective Float will be 25% of the total float. Your company's Investor Relations costs have been reduced by 75%. These funds can be used to expand the company.