Company: MYI
Filing Date: 2025-07-16
Form Type: N-14 8C
Source: 0001193125-25-159991
Chunk: 232

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-16
Form: N-14 8C
Chunk 232
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.e., for every dollar of indebtedness outstanding, MVF is required to have at
least three dollars of assets) or less than 200% with respect to senior securities representing preferred shares (i.e., for every dollar of preferred shares outstanding, MVF is required to have at least two dollars of assets). The Investment
Company Act also provides that MVF may not declare distributions, or purchase its stock (including through tender offers) if, immediately after doing so, it will have an asset coverage ratio of less than 300% or 200%, as applicable. Under the 1940
Act, certain short-term borrowings (such as for cash management purposes) are not subject to these limitations if (i) repaid within 60 days, (ii) not extended or renewed, and (iii) not in excess of 5% of the total assets of MVF.

Preferred Shares.MVF has leveraged its 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
entire