Company: MYI
Filing Date: 2025-08-08
Form Type: PRE 14A
Source: 0001193125-25-176952
Chunk: 211

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-08-08
Form: PRE 14A
Chunk 211
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 not extended or renewed and (iii) not in excess of 5% of the total assets of MIY.

Preferred Shares.MIY has leveraged its portfolio by issuing preferred shares. Under the 1940 Act, MIY is not permitted to issue preferred shares if,
immediately 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 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