
[Federal Register: April 20, 2009 (Volume 74, Number 74)]
[Notices]               
[Page 18005-18006]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ap09-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28692; 812-13647]

 
Triangle Capital Corporation; Notice of Application

April 13, 2009.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 23(c)(3) of 
the Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 23(c) of the Act.

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Summary of the Application: Triangle Capital Corporation (the 
``Company'') requests an order to amend a prior order (the ``Prior 
Order'') that permits the Company to issue restricted shares of its 
common stock (``Restricted Stock'') under the terms of its employee and 
director compensation plan, the Amended and Restated 2007 Equity 
Incentive Plan (the ``Plan'').\1\ Applicant seeks to amend the Prior 
Order in order to permit the Company, pursuant to the Plan, to engage 
in certain transactions that may constitute purchases by the Company of 
its own securities within the meaning of section 23(c) of the Act.
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    \1\ Triangle Capital Corporation, Investment Company Act Release 
Nos. 28165 (Feb. 20, 2008) (notice) and 28196 (Mar. 18, 2008) 
(order).

Filing Dates:  The application was filed on March 27, 2009 and amended 
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on April 10, 2009.

Hearing or Notification of Hearing:  An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicant with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on May 4, 2009, and should be accompanied by proof of service on 
applicant, in the form of an affidavit or, for lawyers, a certificate 
of service. Hearing requests should state the nature of the writer's 
interest, the reason for the request, and the issues contested. Persons 
who wish to be notified of a hearing may request notification by 
writing to the Commission's Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090. The Company, c/o Garland S. 
Tucker III and Steven C. Lilly, Triangle Capital Corporation, 3700 
Glenwood Avenue, Suite 530, Raleigh, NC 27612.

FOR FURTHER INFORMATION CONTACT: John Yoder, Senior Counsel, at (202) 
551-6878, or Janet M. Grossnickle, Assistant Director, at (202) 551-
6821, (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549-1520 (tel. 202-551-5850).

[[Page 18006]]

Applicant's Representations

    1. The Company is an internally managed, non-diversified, closed-
end investment company that has elected to be regulated as a business 
development company (``BDC'') under the Act. The Company is currently 
permitted to issue shares of Restricted Stock under the terms of its 
Plan in reliance on the Prior Order. Applicant seeks to amend the Prior 
Order in order to permit the Company, pursuant to the Plan, to: 
Withhold shares of the Company's common stock or purchase shares of the 
Company's common stock from employees or non-employee directors 
(``Participants'') to satisfy tax withholding obligations related to 
the vesting of Restricted Stock or the exercise of stock options that 
were or will be granted pursuant to the Plan. In addition, the Company 
seeks to amend the Prior Order to permit Participants to pay the 
exercise price of options that were or will be granted to them pursuant 
to the Plan with shares of the Company's common stock already held by 
them. The Company will continue to comply with all of the terms and 
conditions of the Prior Order.
    2. The Plan authorizes the issuance to Participants of shares of 
Restricted Stock and options to purchase shares of the Company's common 
stock, subject to certain forfeiture restrictions. On the date 
Restricted Stock vests, shares of the Restricted Stock are released to 
the Participant and are available for sale or transfer and the value of 
the vesting shares is deemed to be compensation for an employee of the 
Company.\2\ As discussed more fully in the application, certain 
exercises of options result in a Participant being deemed to have 
received compensation in the amount by which the fair market value of 
the shares of the Company's common stock, determined as of the date of 
exercise, exceeds the exercise price. Applicant states that any 
compensation income recognized by an employee generally is subject to 
federal withholding for income and employment tax purposes. 
Accordingly, arrangements must be made to satisfy the necessary 
withholding tax obligations.
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    \2\ During the restriction period (i.e., prior to the lapse of 
the forfeiture restrictions), the Restricted Stock may not be sold, 
transferred, hypothecated, margined, or otherwise encumbered by the 
Participant.
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    3. The Company's stockholders approved the terms and provisions of 
the Plan on May 7, 2008. The Plan explicitly permits the Company to 
withhold shares of the Company's common stock or purchase shares of the 
Company's common stock from the Participants to satisfy tax withholding 
obligations related to the vesting of Restricted Stock or the exercise 
of options granted pursuant to the Plan. The Plan further provides that 
Participants may pay the exercise price of options to purchase shares 
of the Company's stock with shares of the Company's stock already held 
by such Participants.

Applicant's Legal Analysis

    1. Section 23(c) of the Act generally prohibits a registered 
closed-end investment company from purchasing any securities of which 
it is the issuer except in the open market, pursuant to tender offers 
or under other circumstances as the Commission may permit to ensure 
that the purchase is made on a basis that does unfairly discriminate 
against any holders of the class or classes of securities to be 
purchased. The applicant states that the withholding or purchase of 
shares of Restricted Stock and common stock in payment of applicable 
withholding tax obligations or of common stock in payment for the 
exercise price of a stock option might be deemed to be purchases by the 
Company of its own securities within the meaning of section 23(c) and 
therefore prohibited by the Act.
    2. Section 23(c)(3) provides that the Commission may issue an order 
that would permit a closed-end investment company to repurchase its 
shares in circumstances in which the repurchase is made in a manner or 
on a basis that does not unfairly discriminate against any holders of 
the class or classes of securities to be purchased. Applicant believes 
that the requested relief meets the standards of section 23(c)(3).
    3. Applicant states that these purchases will be made on a basis 
which does not unfairly discriminate against the stockholders of the 
Company because all purchases of the Company's stock will be at the 
closing price of the common stock on the NASDAQ (or any other primary 
exchange on which the shares are traded) on the relevant date (i.e., 
the public market price on the date the Restricted Stock vests or the 
date of the exercise of any options). Applicant further states that no 
transactions will be conducted pursuant to the requested order on days 
where there are no reported market transactions involving the Company's 
shares. Applicant submits that because all transactions would take 
place at the public market price, the transactions would not be 
significantly different than could be achieved by any stockholder 
selling in a market transaction.
    4. Applicant submits that the proposed purchases do not raise 
concerns about preferential treatment of the Company's insiders because 
the Plan is a bona fide compensation plan of the type that is common 
among corporations generally. Further, the vesting schedule is 
determined at the time of the initial grant of the Restricted Stock 
while the option exercise price is determined at the time of the 
initial grant of the options. Applicant represents that that all 
purchases will be made only as permitted by the Plan, which was 
approved by the Company's stockholders. Applicant argues that granting 
the requested relief would be consistent with precedent and the 
Commission's recognition of the important role that equity compensation 
can play in attracting and retaining qualified personnel with respect 
to certain types of investment companies, including BDCs.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-8965 Filed 4-17-09; 8:45 am]

BILLING CODE 8010-01-P
