You must bury the shares of your public company to reduce its float. The lower your public company's float, the lower your investor relations cost. [See my article on the proper use of shares.] my link 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]. 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 Your Shares Being On 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. 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 rely on street stock in some other way, to sell nonexistent stocks into the company market. Public short sellers expect to pay the "borrowed" shares back at the much lower cost when the stock collapses. Professional short sellers never expect to buyback the nonexistent shares and legally avoid U.S. taxes on their profits in doing so. Your company cannot be sold short if the shares can't legally be borrowed.
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 the DTC work very hard to make it extremely difficult to create a Cash Market in any stock.
Burying Insider Shares
The insiders must "bury" their share certificates. All insiders must agree to a Pooling & Vaulting Agreement. All insider certificates, which represent the majority of your company's stock, are stored in a safe deposit box at a bank or another repository. To open the safe deposit box, at least two insiders designated by your company must be present. 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. This gives you total control over your stock, something that very few companies achieve.
Keep Your Float Private
It is harder to stop the American public from selling their shares in your company (the float). I believe it can be done. You must eliminate your shareholders potential for loss. You have to pay them for 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. They're more likely to agree to the plan if they know the insiders are not selling.
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.