Company: MYI
Filing Date: 2025-09-02
Form Type: N-14 8C/A
Source: 0001193125-25-193985
Chunk: 231

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-02
Form: N-14 8C/A
Chunk 231
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 portfolio by issuing VMTP Shares. Under the 1940 Act, MVF is not permitted to issue preferred shares if,
immediately after such issuance, the liquidation value of MVF’s outstanding preferred shares exceeds 50% of its assets (including the proceeds from the issuance) less liabilities other than borrowings (i.e., the value of MVF’s assets
must be at least 200% of the liquidation value of its outstanding preferred shares). In addition, MVF would not be permitted to declare any cash dividend or other distribution on its common shares unless, at the time of such declaration, the value
of MVF’s assets less liabilities other than borrowings is at least 200% of such liquidation value.

For tax purposes, MVF is currently required to
allocate tax-exempt interest income, net capital gain and other taxable income, if any, between its common shares and preferred shares outstanding in proportion to total dividends paid to each class for the
year in which or with respect to which tax-exempt income, the net capital gain or other taxable income is paid. If net capital gain or other taxable income is allocated to preferred shares, instead of solely
tax- exempt income, MVF will likely have to pay higher total dividends to preferred shareholders or make special payments to preferred shareholders to compensate them for the increased tax liability. This would reduce the total amount of dividends
paid to the common shareholders, but would increase the portion of the dividend that is tax-

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exempt. If the increase in dividend payments or the special payments to preferred shareholders are not entirely offset by a reduction in the tax liability of, and an increase in the tax-exempt dividends received by, the common shareholders, the advantage of MVF’s leveraged structure to common shareholders will be reduced.

Tender Option Bond Transactions.MVF currently leverages its assets through the use of TOB Residuals, which are derivative interests in MVF Municipal
Bonds. The TOB Residuals in which MVF will invest pay interest or income that, in the opinion of counsel to the issuer of such TOB Residuals, is exempt from regular U.S. federal income tax. No independent investigation will be made to confirm the tax-exempt status of the interest or income paid by TOB Residuals held by MVF. Although volatile, TOB Residuals typically offer the potential for yields exceeding the yields available on fixed rate MVF Municipal
Bonds with comparable credit quality.

TOB Residuals represent beneficial