Company: MYI
Filing Date: 2025-09-05
Form Type: 424B3
Source: 0001193125-25-196285
Chunk: 200

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-05
Form: 424B3
Chunk 200
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 after such issuance, the liquidation value of MIY’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 MIY’s assets must be at least 200% of the liquidation value of its outstanding preferred shares). In addition, MIY would not be permitted to declare any cash dividend or other

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distribution on its common shares unless, at the time of such declaration, the value of MIY’s assets less liabilities other than borrowings is at least 200% of such liquidation value.

For tax purposes, MIY 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, MIY 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-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 MIY’s leveraged structure
to common shareholders will be reduced.

Tender Option Bond Transactions.MIY currently leverages its assets
through the use of TOB Residuals, which are derivative interests in municipal bonds. The TOB Residuals in which MIY 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 MIY. Although volatile, TOB Residuals typically
offer the potential for yields exceeding the yields available on fixed rate municipal bonds with comparable credit quality.

TOB Residuals represent beneficial interests in a TOB Trust. A TOB Trust typically issues two classes of beneficial interests:
TOB Floaters, which are sold to third party investors,