Company: MYI
Filing Date: 2025-09-08
Form Type: DEF 14A
Source: 0001193125-25-198172
Chunk: 207

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-08
Form: DEF 14A
Chunk 207
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assets) or less than 200% with respect to senior securities representing preferred shares (i.e., for every dollar of preferred shares outstanding, MIY is required to have at least two dollars of assets). The 1940 Act also provides that MIY
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 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
share