{"url_path":"/sec/chkp/10-k/2026/item-10","section_key":"item-10","section_title":"Item 10 ADDITIONAL INFORMATION","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-03-31","source_url":"https://www.sec.gov/Archives/edgar/data/1015922/0001178913-26-001932-index.html","accession_number":"0001178913-26-001932","cik":"0001015922","ticker":"CHKP","issuer_name":"CHECK POINT SOFTWARE TECHNOLOGIES LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1015922/0001178913-26-001932-index.html","primary_entity_key":"0001015922","primary_entity_name":"CHECK POINT SOFTWARE TECHNOLOGIES LTD"},"word_count":7704,"has_tables":true,"body_markdown":"ITEM 10.      ADDITIONAL INFORMATION\n\n \n\nWe were incorporated in Israel in July 1993, and we are registered\nwith the Israeli Registrar of Companies as public company number 52-004282-1.\n\n \n\nThe objectives and purposes stated in our memorandum of association\nare to engage in any lawful activity. We develop, market and support a wide range of products and services for IT security, and offer\nour customers an extensive portfolio of network security, endpoint security, data security and management solutions. A broad range of\nour network security solutions operate under a unified security architecture, with central management and enforcement of security policy,\nand with centralized real-time security updates. Our products and services are sold to enterprises, service providers, small and medium-sized\nbusinesses and consumers.\n\n \n\nArticles of Association and Israeli Companies Law\n\n \n\nThe following is a summary of the material provisions of our\narticles of association and related provisions of the Israeli Companies Law. For the complete text of our articles of association, see\n“Item 19 – Exhibits”.\n\n \n\nDescription of shares\n\n \n\nOur authorized share capital consists of the following: (i) 500,000,000\nordinary shares, NIS 0.01 nominal value; (ii) 5,000,000 preferred shares, NIS 0.01 nominal value; and (iii) 10 deferred shares, NIS 1.00\nnominal value.\n\n \n\nPlease refer to Exhibit 2.1 for Items 10.B.3, B.4, B.5, B.6,\nB.7, B.8, B.9 and B.10.\n\n \n\nApproval of certain transactions; obligations of directors, officers\nand shareholders\n\n \n\nOfficers and directors.\nThe Israeli Companies Law codifies the fiduciary duties that office holders, which under the law, includes our directors and executive\nofficers, owe to a company.\n\n \n\nFiduciary duties. An\noffice holder’s fiduciary duties consist of a duty of loyalty and a duty of care.\n\n \n\nThe duty of loyalty requires an office holder to act in good\nfaith and for the benefit of the company, including to avoid any conflict of interest between the office holder’s position in the\ncompany and personal affairs, and proscribes any competition with the company or the exploitation of any business opportunity of the company\nin order to receive personal advantage for himself or herself or for others. This duty also requires an office holder to reveal to the\ncompany any information or documents relating to the company’s affairs that the office holder has received due to his or her position\nas an office holder. A company may approve any of the acts mentioned above; provided, however, that all the following conditions apply:\nthe office holder acted in good faith; neither the act nor the approval of the act prejudices the good of the company; and the office\nholder disclosed the essence of his or her personal interest in the act, including any substantial fact or document, in a reasonable time\nbefore the date for discussion of the approval. A director is required to exercise independent discretion in fulfilling his or her duties\nand may not be party to a voting agreement with respect to his or her vote as a director. A violation of these requirements is deemed\na breach of the director’s duty of loyalty.\n\n \n\nThe duty of care requires an office holder to act with a level\nof care that a reasonable office holder in the same position would employ under the same circumstances. This includes the duty to use\nreasonable means to obtain information regarding the advisability of a given action submitted for his or her approval or performed by\nvirtue of his or her position and all other relevant information material to these actions.\n\n \n\nDisclosure of personal interest.\nThe Israeli Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have\nand all related material information or documents known to him or her, in connection with any existing or proposed transaction by the\ncompany. “Personal interest,” as defined by the Israeli Companies Law, includes a personal interest of any person in an act\nor transaction of the company, including a personal interest of his relative or of a corporation: (i) in which that person or a relative\nof that person holds 5% or more of the shares, a holder of 5% or more of the voting rights, or a director or general manager, or (ii) in\nwhich he or she has the right to appoint at least one director or the general manager, and includes shares for which the person has the\nright to vote pursuant to a power-of-attorney. “Personal interest” does not apply to a personal interest stemming merely from\nholding shares of the company.\n\n56\n\n \n\nThe office holder must immediately make the disclosure of his\nor her personal interest and no later than the first meeting of the company’s board of directors that discusses the particular transaction.\nThis duty does not apply to the personal interest of a relative of the office holder in a transaction unless it is an “extraordinary\ntransaction”. The Israeli Companies Law defines an “extraordinary transaction” as a transaction that is not in the ordinary\ncourse of business of a company, or that is not on market terms, or which is likely to have a material impact on the company’s profitability,\nassets or liabilities. The Israeli Companies Law defines a “relative” as a spouse, sibling, parent, grandparent, descendant\nand the descendant, sibling or parent of a spouse, as well as the spouse of any of the foregoing.\n\n \n\nApprovals. The Israeli\nCompanies Law provides that a transaction with an office holder or a transaction in which an office holder has a personal interest requires\nthe board approval, unless the transaction is an extraordinary transaction or the articles of association provide otherwise. The transaction\nshall not be approved if it is adverse to the company’s interest. If the transaction is an extraordinary transaction, or if it concerns\nexculpation, indemnification, insurance or compensation of an office holder, then the approval of the company’s compensation committee\nand the board of directors is required, except if the compensation arrangement is an immaterial amendment to an existing compensation\narrangement of an officer who is not a director (in which case the approval of the compensation committee is sufficient). Exculpation,\nindemnification, insurance or compensation of a director or the Chief Executive Officer also requires shareholder approval.\n\n \n\nA person who has a personal interest in a matter that is considered\nat a meeting of the board of directors or the audit committee generally may not attend that meeting or vote on that matter, unless a majority\nof the board of directors or the audit committee also has a personal interest in the matter or if such person is invited by the chairman\nof the board of directors or audit committee, as applicable, to present the matter being considered. If a majority of the board of directors\nhas a personal interest in the transaction, all directors may attend that meeting and vote, and a shareholder approval would be required\nas well.\n\n \n\nShareholders. The Israeli\nCompanies Law imposes the same disclosure requirements described above on a controlling shareholder of a public company that it imposes\non an office holder. For this purpose, a “controlling shareholder” is defined as any shareholder who has the ability to direct\nthe company’s actions, including any shareholder holding 25% or more of the voting rights, if no other shareholder owns more than\n50% of the voting rights in the company. Two or more shareholders with a personal interest in the approval of the same transaction are\ndeemed to be one shareholder.\n\n \n\nUnder the Israeli Companies Law, a shareholder has a duty to\nact in good faith toward the company and the other shareholders, and to refrain from abusing his or her power in the company, which includes,\namong other things, voting in the general meeting of shareholders on the following matters:\n\n \n\n•\n\nany amendment to the articles of association,\n\n \n\n•\n\nan increase of the company’s authorized share capital,\n\n \n\n•\n\na merger, or\n\n \n\n•\n\napproval of interested party transactions that require shareholder approval.\n\n \n\nIn addition, any controlling shareholder, any shareholder who\ncan determine the outcome of a shareholder vote, and any shareholder who can appoint or prevent the appointment of an office holder under\nthe company’s articles of association, is under a duty to act with fairness towards the company. The Israeli Companies Law provides\nthat a breach of the duty of fairness will be governed by the laws governing breach of contract. The Israeli Companies Law does not describe\nthe substance of this duty.\n\n \n\nCompensation of Executive Officers and Directors;\nExecutive Compensation Policy\n\n \n\nIn accordance with the Israeli Companies Law, we have adopted\na compensation policy for our executive officers and directors. The purpose of the policy is to describe our overall compensation strategy\nfor our executive officers and directors and to provide guidelines for setting their compensation, as prescribed by the Israeli Companies\nLaw. In addition, according to the Israeli Companies Law, the policy must be reviewed and readopted at least once every three years.\n\n \n\nThe adoption of the compensation policy requires the approval\nof the compensation committee, the board of directors and our shareholders, in that order. The shareholder’s approval must include\nthe majority of shares voted at the meeting. In addition to the majority vote, the shareholder approval must satisfy either of two additional\ntests:\n\n \n\n•\n\nthe majority includes at least a majority of the shares voted by shareholders other than our controlling shareholders or shareholders\nwho have a personal interest in the adoption of the compensation policies; or\n\n \n\n•\n\nthe total number of shares held by non-controlling shareholders and disinterested shareholders that voted against the adoption of\nthe compensation policies, does not exceed 2% of the aggregate voting rights of our company.\n\n \n\n57\n\nIn accordance with the Israeli Companies Law, our policy was\nlast readopted in September 2025 by the compensation committee, the board of directors and our shareholders.\n\n \n\nUnder the Israeli Companies Law, the compensation arrangements\nfor officers (other than the Chief Executive Officer) who are not directors require the approval of the compensation committee and the\nboard of directors; provided, however, that if the compensation arrangement is not in compliance with our executive compensation policy,\nthe arrangement may only be approved by the compensation committee and the board of directors for special reasons to be noted, and the\ncompensation arrangement shall also require a special shareholder approval. If the compensation arrangement is an immaterial amendment\nto an existing compensation arrangement of an officer who is not a director and is in compliance with our executive compensation policy,\nthe approval of the compensation committee is sufficient.\n\n \n\nArrangements regarding the compensation of the Chief Executive\nOfficer and directors require the approval of the compensation committee, the board and the shareholders, in that order. In certain limited\ncases, the compensation of a new Chief Executive Officer who is not a director may be approved without approval of the shareholders.\n\n \n\nClawback Policy\n\n \n\nIn 2023, we adopted a Clawback Policy in compliance with the SEC\nrules and Nasdaq listing standards to recover any excess incentive-based compensation from current and former executive officers after\nan accounting restatement.\n\n \n\nA copy of the Clawback Policy is filed as exhibit 97.1 to this\nAnnual Report.\n\n \n\nIndemnification and insurance of directors and officers; limitations\non liability\n\n \n\nOur articles of association allow us to indemnify, exculpate\nand insure our office holders to the fullest extent permitted under the Israeli Companies Law.\n\n \n\nUnder the Israeli Companies Law, we may indemnify an office holder\nfor any of the following liabilities or expenses that they may incur due to an act performed or failure to act in his or her capacity\nas our office holder:\n\n \n\n•\n\nMonetary liability imposed on the office holder in favor of a third party in a judgment, including a settlement or an arbitral award\nconfirmed by a court.\n\n \n\n \n\n•\n\nReasonable legal costs, including attorneys’ fees, expended by an office holder as a result of an investigation or proceeding\ninstituted against the office holder by a competent authority, provided that such investigation or proceeding concludes without the filing\nof an indictment against the office holder, and either:\n\n \n\n•\n\nno financial liability was imposed on the office holder in lieu of criminal proceedings, or\n\n \n\n•\n\nfinancial liability was imposed on the office holder in lieu of criminal proceedings, but the alleged criminal offense does not require\nproof of criminal intent.\n\n \n\n•\n\nReasonable legal costs, including attorneys’ fees, expended by the office holder or for which the office holder is charged\nby a court:\n\n \n\n•\n\nin an action brought against the office holder by us, on our behalf or on behalf of a third party,\n\n \n\n•\n\nin a criminal action in which the office holder is found innocent, or\n\n \n\n•\n\nin a criminal action in which the office holder is convicted, but in which proof of criminal intent is not required.\n\n \n\nA company may indemnify an office holder in respect of these\nliabilities either in advance of an event or following an event. If a company undertakes to indemnify an office holder in advance of an\nevent, the indemnification, excluding litigation expenses, must be limited to foreseeable events in light of the company’s actual\nactivities when the company undertook such indemnification, and reasonable amounts or standards, as determined by the board of directors.\n\n \n\nA company may obtain insurance for an office holder against liabilities\nincurred in his or her capacity as an office holder. These liabilities include: a breach of duty of care to the company or a third party\nincluding a breach arising out of negligence of the office holder; and a breach of duty of loyalty and any monetary liability imposed\non the office holder in favor of a third party. A company may also exculpate an office holder from a breach of duty of care in advance\nof that breach. Our articles of association provide that the exculpation can be made, either in advance or retroactively, to the extent\npermitted under Israeli law. A company may not exculpate an office holder from a breach of duty of loyalty towards the company or from\na breach of duty of care concerning dividend distribution or a purchase of the company’s shares by the company or other entities\ncontrolled by the company.\n\n58\n\n \n\nUnder the Israeli Companies Law, a company may indemnify or insure\nan office holder against a breach of duty of loyalty only to the extent that the office holder acted in good faith and had reasonable\ngrounds to assume that the action would not prejudice the company. In addition, a company may not indemnify, insure or exculpate an office\nholder against a breach of duty of care if the act or omission were committed intentionally or recklessly (excluding mere negligence),\nor with the intent to derive an unlawful personal gain, or for a fine or forfeit levied against the office holder in connection with a\ncriminal offense.\n\n \n\nWe have resolved to indemnify our directors and officers, to\nthe extent permitted by law and by our articles of association, for liabilities not covered by insurance, that are of certain enumerated\ntypes of events, and subject to limitations as to amount.\n\n \n\nWe have also entered into indemnification, insurance and exculpation\nagreements with our directors and officers undertaking to indemnify, insure and exculpate them to the full extent permitted by the Israeli\nCompanies Law.\n\n \n\n Charitable\nContributions\n\n \n\nOur articles of association authorize the company to contribute\nreasonable amounts to worthy causes. In accordance with our charitable contribution policy, we contribute from time to time to various\nworthy causes.\n\n \n\nDuring 2025, the list of entities to which we contributed included,\namong others, the Tel Aviv University, Yeholot Association and Hostages and Missing Families Forum. Gil Shwed, our founder and Executive\nChair, is a Governor of the Board of Governors of Tel Aviv University, the Chairman of the Board of Trustees of the Youth University of\nTel Aviv University, the founder of Tel-Aviv University’s Check Point Institute for Information Technology and the Chairman of the\nBoard of Directors of Yeholot Association Founded by the Rashi Foundation whose charter is, among other things, to reduce the dropout\nrates in high schools.\n\n \n\nBorrowing power\n\n \n\nOur articles of association grant broad powers to the board of\ndirectors to have us borrow, repay borrowings, make guarantees and grant security interests in borrowings.\n\n \n\nMaterial Contracts\n\n \n\nSummaries of the following material contracts are included in\nthis annual report in the places indicated below:\n\n \n\n-\n\nIndenture, dated as of December 8, 2025, by and between the Company and U.S. Bank Trust Company, National Association, as Trustee,\nand Form of 0% Convertible Senior Notes due 2030 (See Note\n10 to our audited consolidated financial statements included in Item 18 of this Annual Report).\n\n \n\n-\n\nAgreement, dated July 2, 2025, between Tel Aviv-Jaffa Municipality, Israel Electric Company Ltd., Check Point Software Technologies\nLtd. and Israel Canada Shelf 3, Limited Partnership and Long-Term Lease Agreement, dated July 2, 2025, between Tel Aviv-Jaffa Municipality,\nCheck Point Software Technologies Ltd. and Israel Canada Shelf 3, Limited Partnership (See Item 4 “Information\non Check Point – Property, Plants and Equipment).\n\n \n\nIsraeli Taxation, Foreign Exchange Regulation and Investment Programs\n\n \n\nThe following is a summary of the principal Israeli tax laws\napplicable to us, the Israeli Government programs from which we benefit, and Israeli foreign exchange regulations. This section also contains\na discussion of material Israeli tax consequences to our shareholders who are not residents or citizens of Israel. This summary does not\ndiscuss all aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances,\nor to some types of investors subject to special treatment under Israeli law. Examples of investors subject to special treatment under\nIsraeli law include residents of Israel, traders in securities, or persons who own, directly or indirectly, 10% or more of our outstanding\nvoting capital, all of whom are subject to special tax regimes that are not covered in this discussion. Some parts of this discussion\nare based on new tax legislation that has not been subject to judicial or administrative interpretation. The discussion should not be\nconstrued as legal or professional tax advice and does not cover all possible tax consequences.\n\n \n\nYou are urged to consult your own tax advisor\nas to the Israeli and other tax consequences of the purchase, ownership and disposition of our shares, including, in particular, the effect\nof any non-Israeli, state or local taxes.\n\n59\n\n \n\nGeneral corporate tax structure in Israel\n\n \n\nTaxable income of Israeli companies is subject to tax at the\nrate of 23% since 2018.\n\n \n\nHowever, as discussed below, the rate is effectively reduced\nfor income derived from our Technological preferred enterprise and from Special Technological Preferred Enterprise beginning 2024 onwards.\n\n \n\nLaw for the Encouragement of Capital Investments, 1959 (“Investment\nLaw”)\n\n \n\nAmong other changes, the new Law includes Amendment 73 to the\nInvestment Law (“Amendment 73”). Amendment 73 prescribes special tax tracks for technological enterprises. One of the tracks\nis for Technological preferred enterprise—an enterprise for which total consolidated revenues of its parent company and all subsidiaries\nare less than NIS 10 billion. A technological preferred enterprise, as defined in the Law, which is located in the center of Israel\nwill be subject to tax at a rate of 12% on profits deriving from intellectual property. “Special Preferred Technological Enterprise”\n(with consolidated annual revenue of its group is at least NIS 10 billion), as defined by the Investment Law, is entitled to a reduced\ntax rate of 6% on its preferred technological income, regardless of the place the company’s technology preferred enterprise is located.\n The special tax tracks under Amendment 73 are subject to rules issued by the Minister of Finance. On May 1, 2017, the Israeli Finance\nMinister signed tax regulations implementing the OECD’s “nexus approach,” a base erosion and profit shifting (BEPS)\nrequirement for intellectual property (IP) preferential tax regimes. The proposed regulations are subject to approval by the Parliament’s\nFinance Committee. On May 16, 2017 the Knesset Finance Committee approved the regulations effective as of January 1, 2017.\n\n \n\nThe benefits available to a Preferred Enterprise are conditioned\nupon terms stipulated in the Investment Law and the related regulations. If we do not fulfill these conditions, in whole or in part, the\nbenefits can be cancelled, and we may be required to refund the benefits in an amount linked to the Israeli consumer price index plus\ninterest. We believe that our Special Preferred Technological Enterprise program currently operates, in compliance with all applicable\nconditions and criteria, but we cannot assure you that it will continue to do so.\n\n \n\nWe have derived, and expect to continue to derive, a substantial\nportion of our operating income from our Special Preferred Technological  enterprise. We are, therefore, eligible for reduced tax\nrates for an unlimited period.\n\n \n\nTo prepare our consolidated financial statements, we estimate\nour income taxes in each of the jurisdictions in which we operate. This process involves estimating our potential tax exposure together\nwith assessing temporary differences resulting from the differing treatment of certain items for tax and accounting purposes.\n\n \n\nThese differences result in deferred tax assets and liabilities,\nwhich are included within our consolidated balance sheet.\n\n \n\nReduced income under the Investment Law including the Preferred\nEnterprise/Technological preferred enterprise Regime will be freely distributable as dividends, subject to a 15% or 20% withholding tax\n(or at lower rate, under an applicable tax treaty). However, upon the distribution of a dividend from Preferred/ Technological preferred\nIncome to an Israeli company, no withholding tax will be remitted.\n\n \n\nOur tax assessments through the 2020 tax year are considered\nfinal.\n\n \n\nSee also Item 3 “Key Information – Risk factors”\n– Risks Related to Our Business and Our Market – We are the defendants in various lawsuits and have been subject to tax disputes\nand governmental proceedings, which could adversely affect our business, results of operations and financial condition”.\n\n \n\nForeign Exchange Regulations\n\n \n\nUnder the Foreign Exchange Regulations, an Israeli company calculates\nits tax liability in U.S. dollars according to certain orders. The tax liability, as calculated in U.S. dollars is translated into NIS\naccording to the exchange rate as of December 31 of each year.\n\n \n\nDividends, if any, paid to the holders of our shares, and any\namounts payable upon our dissolution, liquidation or winding up, as well as the proceeds of any sale in Israel of our shares to an Israeli\nresident, may be paid in non-Israeli currency. If these amounts are paid in Israeli currency, they may be converted into freely repatriable\nU.S. dollars at the rate of exchange prevailing at the time of conversion. In addition, the statutory framework for the potential imposition\nof exchange controls has not been eliminated, and may be restored at any time by administrative action.\n\n60\n\n \n\nEquity Based Compensation\n\n \n\nThe Israeli tax legislation enables a company to grant options/shares\nthrough one of three tax tracks:\n\n \n\n(a) the income tax track through a trustee pursuant to which\nthe employee pays income tax rate (according to the marginal tax rate of the employee), up to 47% tax in 2023, 2024 and in 2025, plus\npayments to the National Insurance Institute and health tax on the profit gained upon the earlier to occur of the transfer of the options/shares\nor the underlying shares from the trustee to the employee or the sale of the options/shares or the underlying shares by the trustee, and\nthe company may deduct expenses pertaining to the options/shares for tax purposes. The shares/options (or upon their exercise, the underlying\nshares), must be held by a trustee for a period of 12 months commencing from the date of which the options/shares were issued and deposited\nwith the trustee.\n\n \n\n(b) the capital gains tax track through a trustee pursuant to\nwhich the employee pays capital gains tax at a rate of 25% on the capital profit portion and marginal tax rate (including payments to\nthe National Insurance Institute and health tax) on the income portion (in general, the income portion is the profit derived from the\ndifference between the average market value of the share 30 days before the allotment date and the exercise price of the option/share)\nupon the earlier to occur of the transfer of the options/shares or the underlying shares from the trustee to the employee or the sale\nof the options/shares or the underlying shares by the trustee. (On the capital profit, the employee is not required to make payments to\nthe National Insurance Institute and health tax). In this track, on the capital profit, we may not deduct expenses pertaining to the options/shares\nfor tax purposes but may do so on the income portion. The shares/options (or upon their exercise, the underlying shares), must be held\nby a trustee for a period of 24 months commencing from the date of which the options/shares were issued and deposited with the trustee\n(with respect to options/shares granted before January 1, 2006, a period of 30 months commencing from the date of which the options/shares\nwere granted or a period of 24 months commencing from the date of which the options/shares were issued and deposited with the trustee,\nwhichever route is selected).\n\n \n\n(c) the income tax track without a trustee pursuant to which\nthe employee pays income tax rate (according to the marginal tax rate of the employee up to 47% in 2023, 2024 and in 2025, plus payments\nto the National Insurance Institute and health tax on the profit at the allotment date, and pays capital gains tax at a rate of 25% or\n30% on the capital profit upon the sale of the underlying shares/shares, and we may not deduct expenses pertaining to the capital gain\nfor tax purposes but may deduct expenses pertaining to the profit at the allotment date.\n\n \n\nIn addition, subject to the provisions of an applicable tax treaty,\nindividuals who are subject to tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) are also subject\nto an additional tax at a rate of 3% on annual taxable income (including, but not limited to, dividends, interest and capital gain) exceeding\nNIS 721,560 for 2024 and for 2025 (the “Additional Tax”) which amount is linked to the annual change in the Israeli consumer\nprice index. Additionally, effective from January 1, 2025, such individuals will also be subject to an additional surtax of 2% which will\napply exclusively to their annual taxable income derived exclusively from capital sources income (including from dividend distribution)\nexceeding NIS 721,560 (the “Surtax”).\n\n \n\nIn accordance with the provisions of the Israeli Tax Ordinance,\nif a company has selected the capital gains track, the company must continue granting options/shares under the selected capital gains\ntrack until the end of the year following the year in which the first grant of options/shares under that trustee track will be made.\n\n \n\nWe implement the capital gain track on RSUs, PSUs and stock options\ngranted to our employees and directors and the income tax track without a trustee on our ESPP.\n\n \n\nNotwithstanding the above, the company may at any time also grant\noptions/shares under the provisions of the income tax track without a trustee.\n\n \n\nThe above rules apply only to employees, including officeholders\nbut excluding controlling shareholders.\n\n \n\nControlling shareholders will be taxable under section 3(i) to\nthe tax ordinance, according to which, the individual pays income tax rate (according to the marginal tax rate of the individual, up to\n47% plus the Additional Tax if  the individual’s annual taxable income exceeded NIS 721,560 in 2024 and in 2025 as well as\nSurtax in 2025 as described above on the profit upon the sale of the underlying shares/shares.\n\nTaxation of Non-Israeli Subsidiaries\n\n \n\nNon-Israeli subsidiaries are generally taxed based upon tax laws\napplicable in their countries of residence. In accordance with the provisions of Israeli-controlled foreign corporation rules, certain\nincome of a non-Israeli subsidiary, if the subsidiary’s primary source of income is passive income (such as interest, dividends,\nroyalties, rental income or income from capital gains), which are subject to tax at a rate which does not exceed 15% in the foreign corporation’s\njurisdictions may be deemed distributed as a dividend to the Israeli parent company and consequently is subject to Israeli taxation. This\ntax regime will not apply where the subsidiary’s dividend income is derived from taxable profits that were subject to tax exceeding\n15%. An Israeli company that is subject to Israeli taxes on such deemed dividend income of its non-Israeli subsidiaries may generally\nreceive a credit for non-Israeli income taxes paid by the subsidiary in its country of residence.\n\n61\n\n \n\nTaxation of Non-Israeli Shareholders on Receipt of Dividends\n\n \n\nUnder Israeli tax law, a distribution of dividends from income\nattributable to an Approved Enterprise, Privileged Enterprise, Preferred Enterprise,  Technological preferred enterprise or Special\nTechnological preferred enterprise will be subject to tax in Israel at the rate of 15%/20%, which is withheld and paid by the company\npaying the dividend (,(apply on Approved Enterprise or Privileged Enterprise which are not considered Foreign Investors Company only if\nthe dividend is distributed during the benefits period or within the following 12 years). However, if the dividend is attributable partly\nto income derived from an Approved, Privileged or Preferred  Enterprise, and partly to other sources of income, the withholding rate\nwill be a blended rate reflecting the relative portions of the two types of income. Any distribution of dividends from income that is\nnot attributable to an Approved Enterprise, Privileged Enterprise Preferred Enterprise,  Technological preferred enterprise or \nSpecial Technological preferred enterprise will be subject to tax in Israel at the rate of 25% (or to a reduced tax rate if is distributing\nto a foreign shareholder based on an applicable tax treaty), except that dividends distributed to an individual who is deemed “a\nsubstantial shareholder” will be subject to tax at the rate of 30% ( or at a lower rate based on an applicable tax treaty).\n\n \n\nUnder the United States-Israel tax treaty, the maximum tax on\ndividends paid to a holder of shares of our capital stock who is a United States resident is 25%.\n\n \n\nDividends received by a United States company that holds at least\n10% of our voting rights, will be subject to withholding tax at the rate of 12.5% or 15%, depends on the nature of the taxable income,\nprovided that certain other conditions in the tax treaty are met. Dividends distributed to other foreign shareholders may be subject to\ndifferent withholding tax rates based on the applicable tax treaty.\n\n \n\nA non-resident of Israel who has interest or dividend income\nderived from or accrued in Israel, from which tax was withheld at the source, is generally exempt from the duty to file tax returns in\nIsrael in respect of such income, provided such income was not derived from a business conducted in Israel by the taxpayer.\n\n \n\nCapital Gains Taxes Applicable to Non-Israeli Shareholders\n\n \n\nAccording to Israeli domestic tax law, capital gains from the\nsale of our shares by non-Israeli shareholders (including United States residents) are exempt from Israeli taxation under the Israeli\ndomestic tax law, provided that the capital gain is not derived from a permanent establishment in Israel.\n\n \n\nA non-resident of Israel who has interest or dividend income\nderived from or accrued in Israel, from which tax was withheld at the source, is generally exempt from the duty to file tax returns in\nIsrael in respect of such income, provided such income was not derived from a business conducted in Israel by the taxpayer.\n\n \n\nUnited States Federal Income Tax Considerations\n\n \n\nThe following discussion describes certain material U.S. federal\nincome tax considerations relating to the direct or indirect ownership or disposition of our shares by a shareholder who is:\n\n \n\n•\n\nAn individual citizen or resident (as defined for U.S. federal income tax purposes) of the United States;\n\n \n\n•\n\nA domestic partnership;\n\n \n\n•\n\nA corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any of\nits states;\n\n \n\n•\n\nAn estate, if the estates income is subject to U.S. federal income taxation; or\n\n \n\n•\n\nA trust, if a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons (e.g., a U.S.\ncitizen, resident, or corporation) have the authority to control all of its substantial decisions or the trust has a valid election in\neffect under U.S. Treasury Regulations to be treated as a “United States person”.\n\n \n\n \n\n We refer to any of the above as a “U.S. Shareholder”.\n\n \n\nThis discussion is based on the provisions of the U.S. Internal\nRevenue Code of 1986, as amended, referred to as the “Code”, U.S. Treasury Regulations promulgated under the Code and administrative\nand judicial interpretations of the Code, all as in effect as of the date of this Annual Report. This discussion generally considers only\nU.S. Shareholders who will hold our shares as capital assets (within the meaning of Section 1221 of the Code).\n\n \n\nThis summary discussion does not address tax considerations applicable\nto a U.S. Shareholder that may be subject to special tax rules including, without limitation, the following:\n\n \n\n•\n\nAspects of U.S. federal income taxation relevant to U.S. Shareholders by reason of their particular circumstances (including potential\napplication of the alternative minimum tax);\n\n \n\n•\n\nU.S. Shareholders subject to special treatment under the U.S. federal income tax laws, such as banks, financial institutions, insurance\ncompanies, broker-dealers or traders in securities;\n\n \n\n•\n\nU.S. Shareholders that are tax-exempt organizations and pension funds;\n\n \n\n62\n\n•\n\nU.S. Shareholders that are former citizens or long-term residents of the United States;\n\n \n\n•\n\nU.S. Shareholders that are partnerships or entities treated as partnerships or other pass-through entities and persons who own our\nshares through such entities, and non-U.S. individuals or entities;\n\n \n\n•\n\nU.S. Shareholders that are real estate investment trusts or regulated investment companies;\n\n \n\n•\n\nU.S. Shareholders who own 10% or more of our outstanding shares (by vote or value), either directly or constructively ;\n\n \n\n•\n\nU.S. Shareholders who hold our shares as part of a hedging, straddle, integrated, or conversion transaction;\n\n \n\n•\n\nU.S. Shareholders who acquire their shares of our capital stock in a “compensatory transaction”;\n\n \n\n•\n\nU.S. Shareholders whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar; and\n\n \n\n•\n\nAny aspect of U.S. estate, gift, state, or local tax law, or any non-U.S. tax law.\n\n \n\nThe following summary does not address all\nof the tax consequences of owning or disposing of our shares to you based on your individual tax circumstances. Accordingly, you should\nconsult your own tax advisor as to the particular tax consequences to you of owning or disposing of our shares, including the effects\nof applicable state, local, or non-U.S. tax laws and possible changes in the tax laws.\n\n \n\nDividends Paid on the Company’s Shares\n\n \n\nSubject to the discussion below under “Passive Foreign\nInvestment Company Status,” a U.S. Shareholder, as defined above, may be required to include in gross income the amount of any distributions\nmade with respect of our shares (and any Israeli taxes withheld on such distributions) to the extent that the distributions are paid out\nof our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. We do not calculate earnings and\nprofits under United States federal income tax principles.\n\n \n\nCertain non-corporate U.S. Shareholders may qualify for preferential\nrates of taxation with respect to dividends on our capital stock if the dividends are “qualified dividend income”. Qualified\ndividend income generally includes dividends paid by a U.S. corporation or a “qualified foreign corporation”. A non-U.S. corporation,\nsuch as ours, generally will be considered to be a qualified foreign corporation if (i) our shares are readily tradable on an established\nsecurities market in the United States, or (ii) we are eligible for the benefits of a comprehensive U.S. income tax treaty determined\nto be satisfactory to the U.S. Department of the Treasury for purposes of this provision and which includes an exchange of information\nprovision. The U.S. Department of the Treasury and the Internal Revenue Service have determined that the United States-Israel tax treaty\n(the “Treaty”) is satisfactory for this purpose. In addition, our shares are listed on the Nasdaq. However, no assurance can\nbe given that our shares will be considered readily tradable on an established securities market in the future. The reduced rates do not\napply unless certain holding period requirements are satisfied, nor do they apply to dividends received from a passive foreign investment\ncompany (a “PFIC”) (see discussion below). The information returns, reporting the dividends paid to U.S. Shareholders, will\nidentify the amount of dividends eligible for the reduced rates.\n\n63\n\n \n\n \n\nU.S. Income Tax Treatment of Dividends\n\n \n\nAny distributions in excess of earnings and profits will be treated\nfirst as non-taxable return of capital, reducing a U.S. Shareholder’s tax basis in our shares to the extent of the distributions,\nand then as capital gain from a sale or exchange of our shares. Any capital gain so realized will generally be taxable to the U.S. Shareholder\nas either long-term or short-term capital gain depending upon whether the U.S. Shareholder has held our shares for more than one year\nas of the time such distribution is received. Our dividends will generally not qualify for the dividends received deduction available\nto corporations. Any cash distribution paid in Israeli Shekels will equal the U.S. dollar value of the distribution, calculated based\non the spot exchange rate in effect on the date of the distribution, regardless of whether the foreign currency is converted into U.S.\ndollars at that time. Any foreign currency gain or loss a U.S. Shareholder realizes on a subsequent conversion of foreign currency into\nU.S. dollars will be U.S. source ordinary income or loss.\n\n \n\nCredit for Israeli Taxes\n\n \n\nSubject to the PFIC rules discussed below and certain conditions\nand limitations, a U.S. Shareholder of an Israeli corporation may be eligible for a foreign tax credit to offset a portion of the U.S.\ntax liability assessed on Israeli sourced income when repatriated to the United States. The U.S. Internal Revenue Code provides a foreign\ntax credit limitation on the amount of foreign tax credits that may be used during each taxable year. This limitation requires detailed\nknowledge of the mechanics of the rules prescribed in the Code and the supporting regulations. Under no circumstances, can foreign tax\ncredits be used to offset a U.S. tax assessment on U.S. source income, and the credit may not exceed the U.S. tax assessment on foreign\nincome.\n\n \n\nCertain U.S. Treasury Regulations that apply to non-U.S. taxes\npaid or accrued in taxable years beginning on or after December 28, 2021 restrict the availability of any such foreign tax credit based\non the nature of the tax imposed by the non-U.S. jurisdiction (although Notice 2023-55, as extended and modified by Notice 2023-80, provides\ntemporary relief from the application of certain aspects of these regulations for taxable years ending before the date that a notice or\nother guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or guidance)).\n\n \n\nA U.S. Shareholder may elect to claim a foreign tax credit on\nits U.S. federal income tax return for foreign taxes paid or accrued, alternatively, the U.S. Shareholder may elect to claim a deduction\nfor Israeli income tax withheld or paid, but only if the shareholder elects to do so for all foreign income taxes of the same year. Special\nrules for determining a U.S. Shareholder ’s foreign tax credit limitation apply in the case of qualified dividend income. Rules\nsimilar to those concerning adjustments to the foreign tax credit limitation to reflect any capital gain rate differential also apply\nto any qualified dividend income. The rules relating to foreign tax credits are complex and each U.S. Shareholder should consult his,\nher, or its own tax advisor to determine whether and if such U.S. Shareholder would be entitled to this credit.\n\n \n\nSale, Exchange, or Other Disposition of Our Shares\n\nSubject to the PFIC rules discussed below, the sale or exchange\nof our shares would generally result in the recognition of capital gain or loss for the U.S. Shareholder. The amount of gain or loss is\nthe difference between the U.S. dollar value of the amount realized on the sale or exchange and the tax basis in our shares. If a U.S.\nShareholder’s holding period for our shares exceeds one year at the time of the disposition, the amount of the shareholder’s\ngain or loss generally will be long-term capital gain or loss. Long-term capital gains of non-corporate U.S. Shareholders realized upon\na sale or exchange of shares generally will be eligible for a preferential rate of taxation. The deductibility of capital losses may be\nsubject to limitation. Gain or loss recognized by a U.S. Shareholder on a sale or exchange of shares generally will be treated as U.S.\nsource income or loss for U.S. foreign tax credit purposes. Accordingly, in the event any Israeli tax (including withholding tax) is imposed\nupon such sale or other disposition, a U.S. Shareholder may not be able to utilize foreign tax credits unless such U.S. Shareholder has\nforeign source income or gain in the same category from other sources. Moreover, there are special rules under the Treaty, which may impact\na U.S. Shareholder’s ability to claim a foreign tax credit. U.S. Shareholders are urged to consult their own tax advisor regarding\nthe ability to claim a foreign tax credit and the application of the Treaty to such U.S. Shareholder’s particular circumstances.\n\n \n\nAdditional Tax on Investment Income\n\n \n\nU.S. Shareholders that are individuals, estates or trusts and\nwhose income exceeds certain thresholds may be subject to a 3.8% tax on all or a portion of their “net investment income”,\nincluding, among other things, dividends on and capital gains from the sale or other disposition of our shares, subject to certain limitations\nand exceptions.\n\n64\n\n \n\n \n\nPassive Foreign Investment Company Status\n\n \n\nBased upon our income, assets and activities, we believe that\nwe are not currently, and have not been in prior years, a passive foreign investment company for U.S. federal income tax purposes. We\ndo not currently anticipate that we will be a PFIC for any subsequent year. We would be classified as a PFIC if, for any taxable year,\neither:\n\n \n\n•\n\n75% or more of our gross income in the taxable year is passive income, or\n\n \n\n•\n\n50% or more of the average percentage of our assets held during the taxable year produce or are held for the production of passive\nincome.\n\n \n\nFor this purpose, passive income includes, but is not limited\nto, dividends, interest, royalties, rents, annuities and the excess of gain over losses from the disposition of assets that produce passive\nincome.\n\n \n\nIf we were a PFIC for any taxable year during which you held\nshares as a U.S. Shareholder and you did not timely elect to treat us as a “qualified electing fund” under Section 1295\nof the Code or elect to mark our shares to market, you would be subject to special tax rules that have a penalizing effect on the receipt\nof an “excess distribution” on our shares. Generally, a distribution is considered an excess distribution to the extent it\nexceeds 125% of the average annual distributions in the prior three years (or, if shorter, your holding period of our shares before the\ntaxable year). You would also be subject to special tax rules that have a penalizing effect on the gain from the disposition of our shares,\nincluding the treatment if any such gain as ordinary income, not capital gain.\n\n \n\nA U.S. Shareholder may be able to mitigate certain adverse tax\nconsequences of holding shares in a PFIC by making a “qualified electing fund”, “deemed sale” or “mark-to-market”\nelection. However, these elections require specific conditions to be met, for example, as a U.S. Shareholder you may make a qualified\nelecting fund election only if we agree to furnish certain tax information annually. We do not presently prepare or provide this information,\nand this information may not be available to you if we are subsequently determined to be a PFIC.\n\n \n\nThe mark-to-market election is available only for “marketable\nstock”. Generally, stock that is regularly traded on a national securities exchange that is registered with the SEC, including the\nNasdaq (on which our shares are listed), or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that\nthe market price represents a legitimate and sound fair market value. While our shares are currently listed and traded on Nasdaq, no assurance\ncan be given that our shares will be treated as marketable stock. U.S. Shareholders should consult their tax advisors regarding the availability\nand tax consequences of a mark-to-market election with respect to your shares under their particular circumstances.\n\n \n\nA number of specific rules and requirements apply to a U.S. Shareholder\nunder any of the elections available to owners of a PFIC. You are advised to consult your tax advisor concerning these elections.\n\n \n\nInformation Reporting and Back up Withholding\n\n \n\nDividend payments and proceeds from the sale or disposal of shares\nmay be subject to information reporting to the Internal Revenue Service and possible U.S. federal withholding tax. However, withholding\ntaxes may not apply to a holder, in the event they furnish a valid taxpayer identification number or certificate of foreign status and\nmakes any other required certification, or who is otherwise exempt from withholding (for example, a corporation). Amounts withheld as\nwithholding taxes may be credited against a U.S. Shareholder’s federal income tax liability.\n\n \n\nOther Reporting Requirements\n\n \n\nCertain U.S. Shareholders who are individuals are required to\nreport information relating to an interest in our shares, subject to certain exceptions (including an exception for shares held in accounts\nmaintained by U.S. financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their federal\nincome tax return. U.S. Shareholders are urged to consult their tax advisors regarding their information reporting obligations, if any,\nwith respect to their ownership and disposition of our shares.\n\n \n\nDocuments on Display\n\n \n\nThis Annual Report and other information filed or to be filed\nby us with the Securities and Exchange may be accessed at the Securities and Exchange Commission’s website, www.sec.gov. We intend\nto post our Annual Report on our website (www.checkpoint.com) promptly following the filing of our Annual Report with the Securities and\nExchange Commission.\n\n \n\nAdditionally, documents referred to in this Annual Report may\nbe inspected at our principal executive offices located at 5 Shlomo Kaplan Street, Tel Aviv 6789159, Israel.\n\n \n\n65"}