UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

        ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                                    FORM 10-K
 (Mark One)
[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the fiscal year ended March 31, 2008

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from                   to

                         Commission File Number: 814-61

                          CAPITAL SOUTHWEST CORPORATION
             (Exact name of registrant as specified in its charter)

                    Texas                                        75-1072796
(State or other jurisdiction of  incorporation                (I.R.S. Employer
              or organization)                               Identification No.)

   12900 Preston Road, Suite 700, Dallas, Texas                 75230
    (Address of principal executive offices)                   (Zip Code)

       Registrant's telephone number, including area code: (972) 233-8242

Securities registered pursuant to section 12(b) of the Act: None

Securities  registered pursuant to section 12(g) of the Act: Common Stock, $1.00
par value

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes [ ]  No [X]


Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]   No [X]


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X]   No [ ]


Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
One):

   Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]


Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [ ] No [X]


The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  as of September  30, 2007 was  $314,927,409,  based on the last sale
price of such stock as quoted by Nasdaq on such date.

The  number  of  shares  of  common  stock  outstanding  as of May 1,  2008  was
3,889,151.

         Documents Incorporated by Reference               Part of Form 10-K
         -----------------------------------               -----------------

  Proxy Statement for Annual Meeting of Shareholders             Part III
                 to be held July 21, 2008


<PAGE>


                                TABLE OF CONTENTS


                                                                            Page
                                                                            ----


PART I
     Item 1.      Business.....................................................1
     Item 1A.     Risk Factors.................................................1
     Item 1B.     Unresolved Staff Comments....................................4
     Item 2.      Properties...................................................4
     Item 3.      Legal Proceedings............................................4
     Item 4.      Submission of Matters to a Vote of Security Holders..........5

PART II
     Item 5.      Market for Registrant's Common Equity, Related Stockholder
                     Matters and Issuer Purchases of Equity Securities.........5
     Item 6.      Selected Financial Data......................................5
     Item 7.      Management's Discussion and Analysis of Financial Condition
                     and Results of Operations.................................5
     Item 7A.     Quantitative and Qualitative Disclosures About Market Risk...5
     Item 8.      Financial Statements and Supplementary Data..................6
     Item 9.      Changes in and Disagreements With Accountants on Accounting
                     and Financial Disclosure..................................7
     Item 9A.     Controls and Procedures......................................7
     Item 9B.     Other Information............................................8

PART III
     Item 10.     Directors, Executive Officers and Corporate Governance.......8
     Item 11.     Executive Compensation.......................................9
     Item 12.     Security Ownership of Certain Beneficial Owners and
                     Management and Related Stockholder Matters................9
     Item 13.     Certain Relationships and Related Transactions, and
                     Director Independence.....................................9
     Item 14.     Principal Accountant Fees and Services.......................9

PART IV
     Item 15.     Exhibits and Financial Statement Schedules...................9

Signatures ...................................................................11





<PAGE>

                                     PART I


Item 1. Business

         We were  organized  as a Texas  corporation  on April 19,  1961.  Until
September  1969, we operated as a licensee under the Small  Business  Investment
Act of 1958.  At that  time,  we  transferred  to our  wholly-owned  subsidiary,
Capital Southwest Venture Corporation  ("CSVC"),  certain assets and our license
as  a  small  business  investment  company  ("SBIC").  CSVC  is  a  closed-end,
non-diversified  investment  company of the management type registered under the
Investment  Company Act of 1940 (the "1940 Act").  Prior to March 30,  1988,  we
were registered as a closed-end,  non-diversified  investment  company under the
1940 Act.  On that date,  we elected  to become a business  development  company
subject to the  provisions  of the 1940 Act,  as  amended by the Small  Business
Incentive  Act of 1980.  Because  we wholly  own CSVC,  the  portfolios  of both
entities are referred to collectively as "our," "we" and "us."

         We are a venture  capital  investment  company  whose  objective  is to
achieve  capital  appreciation  through  long-term   investments  in  businesses
believed to have  favorable  growth  potential.  Our  investment  interests  are
focused on expansion financings, management buyouts, recapitalizations, industry
consolidations and early-stage financings in a broad range of industry segments.
Our  portfolio is a composite  of companies in which we have major  interests as
well  as  a  number  of  developing  companies  and  marketable   securities  of
established  publicly-owned  companies. We make available significant managerial
assistance  to the  companies  in which we invest  and  believe  that  providing
material  assistance  to such investee  companies is critical to their  business
development activities.

         The 12 largest  investments  we own had a combined cost of  $43,523,388
and a value of $499,866,033, representing 91.3% of the value of our consolidated
investment  portfolio at March 31, 2008.  For a narrative  description of the 12
largest  investments,  see  "Twelve  Largest  Investments  - March 31,  2008" in
Exhibit  13.1 of this  Form  10-K  which is herein  incorporated  by  reference.
Certain of the  information  presented  on the 12 largest  investments  has been
obtained  from the  respective  companies  and,  in certain  cases,  from public
filings of such companies.  The financial  information  presented on each of the
respective companies is from such companies' audited financial statements.

         We compete for attractive investment  opportunities with private equity
funds, venture capital partnerships and corporations, venture capital affiliates
of industrial and financial companies, SBICs and wealthy individuals.

         The number of persons employed by us at March 31, 2008 was seven.

         Our  internet  website  address  is  www.capitalsouthwest.com.  You can
review  the  filings  we  have  made  with  the  U.S.  Securities  and  Exchange
Commission,  free of charge by linking  directly  from our website to NASDAQ,  a
database that links to EDGAR,  the  Electronic  Data  Gathering,  Analysis,  and
Retrieval  System of the SEC. You should be able to access our annual reports on
Form  10-K,  quarterly  reports on Form  10-Q,  current  reports on Form 8-K and
amendments  to those  reports  filed or furnished  pursuant to Section  13(a) or
15(d) of the  Securities  Exchange  Act of 1934.  The  charters  adopted  by the
committees of our board of directors are also available on our website.

Item 1A. Risk Factors

         You should  carefully  consider the risks described below and all other
information  contained  in this  annual  report  on  Form  10-K,  including  our
consolidated  financial  statements and the related notes thereto. The risks and
uncertainties  described below are not the only ones facing us. Additional risks
and uncertainties not presently known to us, or not presently deemed material by
us, may also impair our  operations  and  performance.  If any of the  following
risks actually occur, our business, financial condition or results of operations
could be materially  adversely affected.  If that happens,  the trading price of
our common stock could decline, and you may lose all or part of your investment.



                                       1
<PAGE>

There is  uncertainty  regarding  the  value of our  investments  in  restricted
securities.

          Our net asset  value is based on the values  assigned  to the  various
investments  in  our  portfolio,  determined  in  good  faith  by our  board  of
directors.  Because of the inherent  uncertainty  of the  valuation of portfolio
securities which do not have readily ascertainable market values, our fair value
determinations  may differ  materially  from the values a third  party  would be
willing to pay for such  securities  or the values which would be  applicable to
unrestricted securities having a public market.

We are  subject to  additional  risks in light of the  restatement  of our prior
period consolidated financial statements.

         We have restated our  consolidated  financial  statements  for the year
ended  March 31,  2007 and all years  represented  in our Form 10-K for the year
ended March 31, 2007 due to material  weakness  we  identified  in our  internal
controls  over  accounting  for  taxes.  The  restatement  of  our  consolidated
financial  statements could expose us to legal actions.  The defense of any such
actions could cause the diversion of management's  attention and resources,  and
we could be required to pay damages to settle such  actions if any such  actions
are not resolved in our favor. Even if resolved in our favor, such actions could
cause us to incur significant legal and other expenses.  Moreover, we may be the
subject of negative publicity focusing on the restatement and negative reactions
from shareholders and others with whom we do business.

The lack of liquidity of our  restricted  securities  may  adversely  affect our
business.

         Our   portfolio   contains  many   securities   which  are  subject  to
restrictions  on sale  because  they were  acquired  from  issuers  in  "private
placement"  transactions  or  because we are  deemed to be an  affiliate  of the
issuer. Unless an exemption from the registration requirements of the Securities
Act of 1933 is available,  we will not be able to sell these securities publicly
without  the  expense  and  time  required  to  register  the  securities  under
applicable  federal and state  securities  laws.  In  addition,  contractual  or
practical  limitations  may restrict our ability to liquidate our  securities in
portfolio  companies,  because we may own a relatively  large  percentage of the
issuer's outstanding securities. Sales may also be limited by unfavorable market
conditions.  The  illiquidity  of our  investments  may  preclude  or delay  the
disposition  of such  securities,  which may make it difficult  for us to obtain
cash equal to the value at which we record our investments.

There is limited publicly available information regarding the companies in which
we invest.

         Many of the  securities in our  portfolio are issued by privately  held
companies.  There is generally little or no publicly available information about
such  companies,  and we must rely on the diligence of our  management to obtain
the information  necessary for our decision to invest. There can be no assurance
that such diligence efforts will uncover all material  information  necessary to
make fully informed investment decisions.

Certain of our portfolio companies are highly leveraged.

         Many of our portfolio companies have incurred substantial  indebtedness
in relation to their overall  capital base. Such  indebtedness  often has a term
that will require the balance of the loan to be refinanced  when it matures.  If
portfolio companies cannot generate adequate cash flow to meet the principal and
interest payments on their  indebtedness,  the value of our investments could be
reduced or eliminated through  foreclosure on the portfolio  company's assets or
by the portfolio company's reorganization or bankruptcy.

Fluctuations may occur in our quarterly results.

         Our  quarterly  operating  results may  fluctuate  materially  due to a
number of factors including,  among others,  variations in and the timing of the
recognition of realized and unrealized  gains or losses,  the degree to which we
encounter  competition in our portfolio  companies' markets, the ability to find
and close suitable investments,  and general economic conditions. As a result of
these  factors,  results  for any  period  should  not be  relied  upon as being
indicative of performance in future periods.



                                       2
<PAGE>

We may not continue to qualify for pass-through tax treatment.

         We may not qualify for conduit tax treatment as a Regulated  Investment
Company ("RIC") if we are unable to comply with the requirements of Subchapter M
of the Internal Revenue Code. If we fail to satisfy such  requirements and cease
to qualify for conduit tax treatment, we will be subject to federal taxes on our
net investment  income.  To the extent we had unrealized gains, we would have to
establish   reserves  for  taxes,   which  would  reduce  our  net  asset  value
accordingly.  In  addition,  if we,  as a RIC,  were to  decide to make a deemed
distribution of net realized  capital gains and retain the net realized  capital
gain, we would have to establish  appropriate  reserves for taxes, at the end of
the tax year, that we would have to pay on behalf of our shareholders.  The loss
of this  pass-through  tax treatment could have a material adverse effect on the
total return, if any, obtainable from an investment in our common stock.

         Historically,  we have distributed net investment income semi-annually.
Our current  intention is to continue these  distributions of ordinary income to
our  shareholders.  Also,  historically,  we have retained net realized  capital
gains,  paid the resulting tax at the corporate level and retained the after-tax
gains to supplement our equity capital and support  continuing  additions to our
portfolio. Our shareholders then report such capital gains on their tax returns,
receive credit for the tax we paid and are deemed to have  reinvested the amount
of the  retained  after-tax  gain.  We cannot  assure  you that we will  achieve
investment  results or maintain a RIC tax status  that will allow any  specified
level of cash  distributions  or our  shareholders'  current  tax  treatment  of
realized and retained capital gains.

Investment  in shares of our common  stock  should not be  considered a complete
investment program.

         Our  stock  is  intended  for  investors   seeking   long-term  capital
appreciation.  Our investments in portfolio  securities  generally  require many
years to reach  maturity,  and  such  investments  generally  are  illiquid.  An
investment in our shares should not be considered a complete investment program.
Each  prospective  purchaser  should  take into  account  his or her  investment
objectives as well as his or her other investments when considering the purchase
of our shares.

Our common stock often trades at a discount from net asset value.

         Our common  stock is listed on The  Nasdaq  Global  Market  ("NASDAQ").
Shareholders  desiring  liquidity  may sell  their  shares on NASDAQ at  current
market value,  which has often been below net asset value.  Shares of closed-end
investment  companies  frequently trade at discounts from net asset value, which
is a risk  separate and distinct  from the risk that a fund's  performance  will
cause its net asset value to decrease.

Our financial  condition and results of operations will depend on our ability to
effectively manage any future growth.

         Sustaining  growth  depends  on  our  ability  to  identify,  evaluate,
finance,   and  invest  in  companies   that  meet  our   investment   criteria.
Accomplishing  such  results  on a  cost-effective  basis is a  function  of our
marketing  capabilities  and  skillful  management  of the  investment  process.
Failure to achieve  future  growth could have a material  adverse  effect on our
business, financial condition, and results of operations.

We are dependent upon management for our future success.

         Selection,  structuring  and closing our  investments  depends upon the
diligence and skill of our  management,  which is responsible  for  identifying,
evaluating,  negotiating,  monitoring  and  disposing  of our  investments.  Our
management's capabilities may significantly impact our results of operations. If
we lose any member of our management team and he/she cannot be promptly replaced
with an  equally  capable  team  member,  our  results  of  operations  could be
significantly impacted.

We operate in a highly competitive market for investment opportunities.

         We compete for attractive investment  opportunities with private equity
funds, venture capital partnerships and corporations, venture capital affiliates
of industrial and financial companies,  SBICs and wealthy  individuals.  Some of
these competitors are substantially larger and have greater financial resources,



                                       3
<PAGE>

and some are subject to different and frequently less stringent regulation. As a
result of this  competition,  we may not be able to take advantage of attractive
investment opportunities from time to time and there can be no assurance that we
will be able to identify and make investments that satisfy our objectives.

Changes in laws or regulations governing our operations or our failure to comply
with those laws or regulations may adversely affect our business.

         We and our portfolio companies are subject to regulation by laws at the
local,  state and federal level.  These laws and  regulations,  as well as their
interpretation,  may be changed from time to time.  Accordingly,  any changes in
these laws and  regulations or failure to comply with them could have a material
adverse effect on our business.  Certain of these laws and  regulations  pertain
specifically to business development companies such as ours.

Failure to deploy new capital may reduce our return on equity.

         If we fail to invest our capital effectively,  our return on equity may
be decreased, which could reduce the price of the shares of our common stock.

The market price of our common stock may fluctuate significantly.

         The market  price and  marketability  of shares of our common stock may
from time to time be significantly  affected by numerous factors,  including our
investment  results,  market  conditions,  and other  influences and events over
which we have no control and that may not be directly related to us.

Item 1B. Unresolved Staff Comments

         We have no unresolved staff comments to report pursuant to Item 1B.

Item 2. Properties

         We  maintain  our offices at 12900  Preston  Road,  Suite 700,  Dallas,
Texas,  75230,  where we rent  approximately  4,232  square feet of office space
pursuant to a lease  agreement  expiring in February  2013.  We believe that our
offices are adequate to meet our current and expected future needs.

Item 3. Legal Proceedings

         We are currently the subject of certain legal actions. In our judgment,
none of the lawsuits currently pending against us, either individually or in the
aggregate, is likely to have a material adverse effect on our business,  results
of operations, or financial position.

         We,  Capital  Southwest  Corporation  and CSVC,  have  been  named in a
lawsuit  filed on August 27,  2007 in the United  States  District  Court of the
Northern District of Texas, Dallas Division, against Heelys, Inc and their Chief
Executive  Officer,  Chief  Financial  Officer,  the  directors who signed their
registration statement with the Securities and Exchange Commission in connection
with  their  December  7,  2006  initial  public  offering  ("IPO"),  and  their
underwriters for the IPO. The complaint alleges violations of Sections 11 and 15
of the  Securities  Act of 1933  and the  plaintiffs  are  seeking  compensatory
damages in an  unspecified  amount,  as well as  reasonable  costs and  expenses
incurred in the action, including counsel fees and expert fees.

         Similar  suits were also  filed in 2007 and 2008 in the  United  States
District Court of the Northern  District of Texas making  substantially  similar
allegations  under  Sections 11, 12 and 15 of the  Securities  Act of 1933,  and
seeking substantially similar damages. These lawsuits have been transferred to a
single  judge,  and we expect  that all the cases  will be  consolidated  into a
single action, with a consolidated complaint filed shortly thereafter.

         We believe that the  plaintiffs'  claims are without merit, we deny the
allegations in the complaints, and we intend to vigorously defend the lawsuits.



                                       4
<PAGE>

         Additionally,  we, Capital Southwest Corporation,  have been named in a
lawsuit filed on April 10, 2008 in the 193rd  Judicial  District  Court,  Dallas
County,  Texas.  ZS Crossover  II, L.P., ZS Special I, L.P. and Warlen L.P. (the
"petitioners")  filed the  action to compel us to  produce  for  inspection  and
copying  certain  records of the Company,  primarily its  shareholder  list. The
petitioners  are not  seeking  an award in  damages  from the  Company,  but are
seeking an unspecified amount of legal fees and expenses.

Item 4. Submission of Matters to a Vote of Security Holders

         No matters  were  submitted  to a vote of security  holders  during the
quarter ended March 31, 2008.
                                     PART II

Item 5. Market for Registrant's  Common Equity,  Related Stockholder Matters and
        Issuer Purchases of Equity Securities

         Information  set forth under the captions  "Shareholder  Information  -
Shareholders,  Market Prices and Dividends" in Exhibit 13.1 of this Form 10-K is
herein incorporated by reference.

                                Performance Graph

         The following graph compares our cumulative  total  shareholder  return
     during the last five years  (based on the market  price of our common stock
     and  assuming  reinvestment  of all  dividends  and tax credits on retained
     long-term  capital  gains)  with the Total  Return  Index for NASDAQ  (U.S.
     companies)  and with the Total  Return Index for Nasdaq  Financial  Stocks,
     both of which  indices  have been  prepared  by the Center for  Research in
     Security Prices at the University of Chicago.

                Comparison of Five Year Cumulative Total Returns

                                 [GRAPH OMITTED]



              Nasdaq Total            Nasdaq Financial         Capital Southwest
              Return (U.S.)                Stocks                 Corporation

2003            100.000                   100.000                   100.000
2004            147.600                   143.777                   167.559
2005            148.586                   149.552                   172.435
2006            175.219                   175.695                   210.125
2007            181.752                   183.907                   344.239
2008            169.511                   155.262                   275.615


Item 6. Selected Financial Data

         See Exhibit 13.1 "Selected  Consolidated  Financial  Data" of this Form
10-K.


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

         See Exhibit 13.1 "Selected  Consolidated  Financial  Data" of this Form
10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         We  are  subject  to  financial  market  risks,  including  changes  in
marketable  equity  security  prices.   We  do  not  use  derivative   financial
instruments to mitigate any of these risks.



                                       5
<PAGE>
<TABLE>
<CAPTION>

         Our investment  performance  is a function of our portfolio  companies'
profitability,  which may be affected by economic  cycles,  competitive  forces,
foreign  currency  fluctuations  and production costs including labor rates, raw
material prices and certain basic commodity prices. Most of the companies in our
investment  portfolio do not hedge their  exposure to raw material and commodity
price fluctuations. However, the portfolio company with the greatest exposure to
foreign  currency  fluctuations  generally  hedges  its  exposure.  All of these
factors may have an adverse  effect on the value of our  investments  and on our
net asset value.

         Our  investment  in  portfolio   securities  includes  fixed-rate  debt
securities which totaled $9,000,000 at March 31, 2008, equivalent to 1.6% of the
value of our total  investments.  Generally,  these  debt  securities  are below
investment  grade and have relatively  high fixed rates of interest,  therefore,
minor changes in market yields of publicly-traded debt securities have little or
no effect on the values of debt  securities  in our  portfolio  and no effect on
interest  income.  Our  investments  in debt  securities  are generally  held to
maturity and their fair values are  determined  on the basis of the terms of the
debt security and the financial condition of the issuer.

         A portion  of our  investment  portfolio  consists  of debt and  equity
securities of private companies. We anticipate little or no effect on the values
of these  investments  from modest  changes in public market equity  valuations.
Should  significant  changes in market  valuations of comparable  publicly-owned
companies  occur,  there may be a corresponding  effect on valuations of private
companies,  which  would  affect the value and the amount and timing of proceeds
eventually  realized  from  these  investments.  A  portion  of  our  investment
portfolio also consists of restricted common stocks of publicly-owned companies.
The fair values of these  restricted  securities are influenced by the nature of
applicable resale restrictions,  the underlying earnings and financial condition
of the  issuers  of such  restricted  securities  and the market  valuations  of
comparable  publicly-owned companies. A portion of our investment portfolio also
consists of  unrestricted,  freely  marketable  common stocks of  publicly-owned
companies.  These freely marketable investments,  which are valued at the public
market price, are directly exposed to equity price risks, in that a change in an
issuer's  public market equity price would result in an identical  change in the
value of our investment in such security.

Item 8. Financial Statements and Supplementary Data

         See Item 15 of this  Form  10-K -  "Exhibits  and  Financial  Statement
Schedules."


Selected Quarterly Financial Data (Unaudited)
---------------------------------


         The   following   presents  a  summary  of  the   unaudited   quarterly
consolidated financial information for the years ended March 31, 2008 and 2007.


                                                  First       Second         Third      Fourth
                                                 Quarter      Quarter       Quarter     Quarter        Total
                                                 -------      -------       -------     -------        -----
                                                          (In thousands, except per share amounts)
<S>                                              <C>          <C>           <C>         <C>            <C>

2008
----
    Net investment income                      $     641    $   1,211    $   1,806    $      57    $   3,715
    Net realized gain (loss) on investment           326          403         (489)        --            240
    Net increase (decrease) in unrealized
        appreciation of investments               17,148     (138,129)     (64,798)      42,809     (142,970)
    Net increase (decrease) in net assets
       from operations                            18,115     (136,515)     (63,481)      42,866     (139,015)
    Net increase (decrease) in net assets
       from operations per share                    4.66       (35.10)      (16.32)       11.02       (35.74)



                                       6
<PAGE>

                                                  First       Second         Third      Fourth
                                                 Quarter      Quarter       Quarter     Quarter        Total
                                                 -------      -------       -------     -------        -----
                                                          (In thousands, except per share amounts)
2007
----
    Net investment income                      $     492    $   1,170    $   1,617    $     954    $   4,233
    Net realized gain (loss) on investment           397        9,219       19,531      (14,181)      14,966
    Net increase (decrease) in unrealized
       appreciation of investments                (5,218)      (2,931)     132,210       23,621      147,682
    Net increase (decrease) in net assets
       from operations                            (4,329)       7,458      153,358       10,394      166,881
    Net increase (decrease) in net assets
       from operations per share                   (1.12)        1.92        39.46         2.66        42.94

</TABLE>

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

         None.

Item 9A. Controls and Procedures

(i)      Disclosure Controls and Procedures.

         As of March 31, 2008, an evaluation was performed under the supervision
and with the  participation  of our  management,  including  the  President  and
Controller,  of the  effectiveness of the design and operation of our disclosure
controls and  procedures  (as defined in Rules  13a-15(e)  and  15d-15(e) of the
Securities  Exchange  Act of 1934 (the "1934  Act")).  Disclosure  controls  and
procedures means controls and other procedures of an issuer that are designed to
ensure that  information  required to be  disclosed by the issuer in the reports
that it files or submits under the 1934 Act is recorded,  processed,  summarized
and reported,  within time periods  specified in the SEC's rules and forms,  and
that  such   information  is  accumulated  and   communicated  to  the  issuer's
management,  as  appropriate,  to  allow  timely  decisions  regarding  required
disclosures.  As of March 31, 2008,  based on this  evaluation of our disclosure
controls  and  procedures,  our  President  and  Controller  concluded  that our
disclosure controls and procedures were effective as of March 31, 2008.

         During the fiscal quarter ended March 31, 2008, the Company implemented
the following  control in order to remediate the material weakness we identified
in our  internal  controls  over  accounting  for taxes,  which  resulted in the
restatement of our  consolidated  financial  statements for the year ended March
31,  2007 and years  represented  in our Form 10-K for the year ended  March 31,
2007.

     o    On a quarterly  basis the Company will  consult with a RIC  compliance
          expert, on our current RIC status and the potential impact of proposed
          transactions  and  scenarios on the  Company's  future RIC  compliance
          status. The Company has engaged KPMG, LLP in this capacity.

         There were no other  changes to our internal  controls  over  financial
reporting that have materially affected,  or are reasonably likely to materially
affect our internal controls over financial reporting.

(ii)    Internal Control Over Financial Reporting.

(a)     Management's annual report on internal control over financial reporting.

         The  Company's  management  report on internal  control over  financial
reporting is set forth in our 2008 Annual Report and is  incorporated  herein by
reference.



                                       7
<PAGE>


(b)      Attestation report of the registered public accounting firm

         Our  independent  registered  public  accountants,  Grant Thornton LLP,
audited the  consolidated  financial  statements  and have issued an attestation
report on the effectiveness of our internal control over financial  reporting as
of  March  31,  2008,  which  is set  forth in our  2008  Annual  Report  and is
incorporated herein by reference.

Item 9B. Other Information

         There have been no  significant  changes in our internal  controls over
financial  reporting  or in other  factors that could  significantly  affect the
internal controls over financial reporting during the year ended March 31, 2008.

                                    PART III

Item 10. Directors, Executive Officers and Corporate Governance

         The  section  of our  2008  Proxy  Statement  captioned  "Nominees  for
Director"  under "Proposal 1. Election of Directors"  identifies  members of our
board  of  directors  and  nominees,  and is  incorporated  in  this  Item 10 by
reference.

         The  names  and  ages of our  executive  officers  as of June 2,  2008,
together with certain biographical information, are as follows:

     William M. Ashbaugh, age 53, has served as Senior Vice President since 2005
           and Vice  President  since  2001.  He  previously  served as Managing
           Director  in the  corporate  finance  departments  of Hoak  Breedlove
           Wesneski & Co. from 1998 to 2001, Principal Financial Securities from
           1997 to 1998 and Southwest Securities from 1995 to 1997.

     Gary  L. Martin, age 61, was named President and Chief Executive Officer in
           July 2007, has been a director since July 1988 and has served as Vice
           President  since 1984. He previously  served as Vice  President  from
           1978 to 1980.  Since 1980,  Mr. Martin has served as President of The
           Whitmore Manufacturing Company, a wholly-owned portfolio company.

     Jeffrey G. Peterson,  age 34, was named Secretary and Compliance Officer in
            August  2007,  has  served as Vice  President  since 2005 and was an
            Investment  Associate  since 2001. He previously held positions with
            the investment  banking  division of Scott & Stringfellow,  Inc. and
            the corporate lending division of Bank One.

         The  sections  of our 2008  Proxy  Statement  captioned  "Meetings  and
Committees of the Board of Directors  under  "Proposal 1. Election of Directors"
and "Report of the Audit Committee" identifies members of our audit committee of
our  board of  directors  and our  audit  committee  financial  expert,  and are
incorporated in this Item 10 by reference.

         The  section  of our 2008  Proxy  Statement  captioned  "Section  16(a)
Beneficial  Ownership  Reporting  Compliance" is incorporated in this Item 10 by
reference.

              Code of Ethics

         We have  adopted a code of ethics  that  applies to all our  directors,
officers and employees. We have made the Code of Conduct and Ethics available on
our website at www.capitalsouthwest.com. Shareholders may request a free copy of
the Code of Conduct and Ethics from: Jeffrey G. Peterson, Corporate Secretary.



                                       8
<PAGE>
<TABLE>
<CAPTION>

Item 11. Executive Compensation

         The  information in the section of our 2008 Proxy  Statement  captioned
"Compensation  Discussion  and  Analysis"  is  incorporated  in this  Item 11 by
reference.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

         The information in the sections of our 2008 Proxy  Statement  captioned
"Stock Ownership of Certain  Beneficial Owners" are incorporated in this Item 12
by reference.

         The table  below sets forth  certain  information  as of March 31, 2008
regarding  the shares of our common stock  available  for grant or granted under
stock option plans that (i) were approved by our shareholders, and (ii) were not
approved by our shareholders.

                                       Equity Compensation Plan Information


                          Number of Securities
                            To Be Issued Upon            Weighted-Average Exercise              Number of Securities
                               Exercise of                 Price Of Outstanding                Remaining Available For
                          Outstanding Options,                   Options,                   Future Issuance Under Equity
Plan Category             Warrants And Rights              Warrants And Rights                  Compensation Plans
-------------             -------------------              -------------------                  ------------------
<S>                       <C>                              <C>                                  <C>
Equity                           70,400                          $109.998                              37,500
compensation plans
approved by security
holders(1)

Equity                              --                             --                                     --
compensation plans
not approved by
security holders                 ______                           ______                               ______

       Total                     70,400                          $109.998                              37,500
</TABLE>

------

     (1)  Includes the 1999 Stock Option Plan.  For a description  of this plan,
          please  refer to Footnote 5 contained  in our  consolidated  financial
          statements.

Item 13.  Certain   Relationships   and  Related   Transactions,   and  Director
          Independence

         The information in the sections of our 2008 Proxy  Statement  captioned
"Meetings  and  Committees  of the  Board  of  Directors"  -  "Committee  Member
Independence"  and "Certain  Relationships  and Related Party  Transactions" are
incorporated in this Item 13 by reference.


Item 14. Principal Accountant Fees and Services

         The information in the sections of our 2008 Proxy  Statement  captioned
"Proposal 2:  Ratification of Appointment of Independent  Registered  Accounting
Firm" and "Audit and Other Fees" are incorporated in this Item 14 by reference.

                                     PART IV

Item 15. Exhibits and Financial Statement Schedules

    (a)(1)  The  following  information  included  in  Exhibit  13.1  is  herein
incorporated by reference:



                                       9
<PAGE>


        (A) Portfolio of Investments - March 31, 2008

            Consolidated  Statements of Financial Condition - March 31, 2008 and
            2007
            Consolidated  Statements of Operations - Years Ended March 31, 2008,
            2007 and 2006
            Consolidated Statements of Changes in Net Assets - Years Ended March
            31, 2008, 2007 and 2006
            Consolidated  Statements of Cash Flows - Years Ended March 31, 2008,
            2007 and 2006

        (B) Notes to Consolidated Financial Statements

        (C) Notes to Portfolio of Investments

        (D) Selected Per Share Data and Ratios

        (E) Management's Report on Internal Control over Financial Reporting

        (F) Reports of Independent Registered Public Accounting Firm

        (G) Portfolio Changes During the Year

    (a)(2) All  schedules  are omitted  because they are not  applicable  or not
required, or the information is otherwise supplied.

(a)(3) See the Exhibit Index.
















                                       10
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                   CAPITAL SOUTHWEST CORPORATION

                                                   By: /s/ Gary L. Martin
                                                       ---------------------
                                                       Gary L. Martin, President

Date:  May 23, 2008

                                POWER OF ATTORNEY

         KNOW  ALL  MEN  BY  THESE  PRESENTS  that  each  of  Capital  Southwest
Corporation and its Subsidiaries  undersigned  directors hereby  constitutes and
appoints Gary L. Martin, its or his true and lawful  attorney-in-fact and agent,
for  it or him  and  in  its or his  name,  place  and  stead,  in any  and  all
capacities, with full power to act alone, to sign any and all amendments to this
Report,  and to file  each  such  amendment  to the  Report,  with all  exhibits
thereto,  and any and all other  documents  in  connection  therewith,  with the
Securities and Exchange Commission,  hereby granting unto said  attorney-in-fact
and agent full power and authority to do and perform any and all acts and things
requisite  and  necessary  to be done in and about the  premises as fully to all
intents and purposes as it or he might or could do in person,  hereby  ratifying
and confirming all that said attorney-in-fact and agent may lawfully do or cause
to be done by virture hereof.

         Pursuant to the requirement of the Securities and Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated:

        Signature                        Title                          Date
        ---------                        -----                          ----


  /s/  Gary L. Martin                  President                    May 23, 2008
--------------------------      (chief executive officer)
    Gary L. Martin

  /s/ William R. Thomas          Chairman of the Board              May 23, 2008
-------------------------
    William R. Thomas

  /s/  Donald W. Burton               Director                      May 23, 2008
-------------------------
    Donald W. Burton

  /s/  Graeme W. Henderson            Director                      May 23, 2008
--------------------------
    Graeme W. Henderson

  /s/  Samuel B. Ligon                Director                      May 23, 2008
--------------------------
    Samuel B. Ligon

  /s/ Gary L. Martin                  Director                      May 23, 2008
--------------------------
    Gary L. Martin

  /s/  John H. Wilson                 Director                      May 23, 2008
--------------------------
    John H. Wilson

  /s/ Tracy L. Morris                  Controller                   May 23, 2008
--------------------------  (chief financial/accounting officer)
    Tracy  L. Morris





                                       11
<PAGE>


                                  EXHIBIT INDEX

     The  following  exhibits  are filed  with this  report or are  incorporated
herein by reference to a prior filing,  in accordance with Rule 12b-32 under the
Securities  Exchange  Act of 1934.  Asterisk  denotes  exhibits  filed with this
report. Double asterick denotes exhibits furnished with this report.

        Exhibit No.                               Desription
        -----------                               ----------

          3.1(a)              Articles   of   Incorporation   and   Articles  of
                              Amendment to Articles of Incorporation, dated June
                              25,  1969  (filed  as  Exhibit  1(a)  and  1(b) to
                              Amendment  No. 3 to Form N-2 for the  fiscal  year
                              ended March 31, 1979).

          3.1(b)              Articles    of    Amendment    to    Articles   of
                              Incorporation,  dated July 20,  1987  (filed as an
                              exhibit  to Form  N-SAR for the six  month  period
                              ended September 30, 1987).

          3.2                 By-Laws of the Company, as amended.

          4.1                 Specimen  of Common  Stock  certificate  (filed as
                              Exhibit 4.1 to Form 10-K for the fiscal year ended
                              March 31, 2002).

          10.1                The  RectorSeal  Corporation  and  Jet-Lube,  Inc.
                              Employee  Stock  Ownership  Plan  as  revised  and
                              restated effective April 1, 2007.

          10.2                Retirement Plan for Employees of Capital Southwest
                              Corporation  and Its  Affiliates  as  amended  and
                              restated effective April 1, 2006.


          10.3                Capital  Southwest  Corporation and Its Affiliates
                              Restoration of Retirement  Income Plan for certain
                              highly-compensated  superseded  plan  participants
                              effective  April 1, 1993 (filed as Exhibit 10.4 to
                              Form  10-K for the  fiscal  year  ended  March 31,
                              1995).

          10.4                Amendment One to Capital Southwest Corporation and
                              Its Affiliates  Restoration  of Retirement  Income
                              Plan  for  certain  highly-compensated  superceded
                              plan  participants  effective April 1, 1993 (filed
                              as Exhibit  10.6 to Form 10-K for the fiscal  year
                              ended March 31, 1998).

           10.5               Capital  Southwest  Corporation  Retirement Income
                              Restoration Plan as amended and restated effective
                              April 1, 1989 (filed as Exhibit  10.5 to Form 10-K
                              for the fiscal year ended March 31, 1995).

           10.6               Form of  Indemnification  Agreement which has been
                              established   with  all  directors  and  executive
                              officers of the Company  (filed as Exhibit 10.9 to
                              Form 8-K dated February 10, 1994).

           10.7               Capital  Southwest  Corporation  1999 Stock Option
                              Plan (filed as Exhibit  10.10 to Form 10-K for the
                              fiscal year ended March 31, 2000).

           10.8               Severance Pay  Agreement  with William M. Ashbaugh
                              (filed as Exhibit  10.1 to Form 8-K dated July 18,
                              2005).

           10.10              Severance Pay  Agreement  with Jeffrey G. Peterson
                              (filed as Exhibit  10.4 to Form 8-K dated July 18,
                              2005).

           10.11*             Amendment One to Retirement  Plan for Employees of
                              Capital  Southwest  Corporation and its Affiliates
                              as amended and restated effective April 1, 2006.




<PAGE>



           13.1*              Selected Consolidated Financial Data.

           21.1*              List of subsidiaries of the Company.

           23.1*              Consent   of   Independent    Registered    Public
                              Accounting Firm - Grant Thornton LLP.

           31.1*              Certification   of  President   required  by  Rule
                              13a-14(a)  or  Rule  15d-14(a)  of the  Securities
                              Exchange Act of 1934,  as amended  (the  "Exchange
                              Act"), filed herewith.

           31.2*              Certification  of  Controller   required  by  Rule
                              13a-14(a) or Rule  15d-14(a) of the Exchange  Act,
                              filed herewith.

           32.1**             Certification   of  President   required  by  Rule
                              13a-14(b)  or Rule  15d-14(b)  of the Exchange Act
                              and Section  1350 of Chapter 63 of Title 18 of the
                              United States Code, furnished herewith.

           32.2**             Certification  of  Controller   required  by  Rule
                              13a-14(b)  or Rule  15d-14(b)  of the Exchange Act
                              and Section  1350 of Chapter 63 of Title 18 of the
                              United States Code, furnished herewith.