{"url_path":"/sec/forty/10-k/2026/item-16g","section_key":"item-16g","section_title":"Item 16G CORPORATE GOVERNANCE**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1045986/0001213900-26-055948-index.html","accession_number":"0001213900-26-055948","cik":"0001045986","ticker":"FORTY","issuer_name":"FORMULA SYSTEMS (1985) LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1045986/0001213900-26-055948-index.html","primary_entity_key":"0001045986","primary_entity_name":"FORMULA SYSTEMS (1985) LTD"},"word_count":506,"has_tables":true,"body_markdown":"**ITEM 16G. CORPORATE GOVERNANCE**\n\n \n\nThe Nasdaq Global Select Market\nrequires companies with securities listed thereon to comply with its corporate governance standards. As a foreign private issuer, we are\nnot required to comply with all of the rules that apply to listed domestic U.S. companies. Pursuant to Nasdaq listing rule 5615(a)(3),\nwe have notified Nasdaq that with respect to the corporate governance practices described below, we instead follow Israeli law and practice\nand accordingly do not follow the Nasdaq listing rules. Except for the differences described below, we do not believe there are any significant\ndifferences between our corporate governance practices and those that apply to a U.S. domestic issuer under the Nasdaq corporate governance\nrules.\n\n \n\n \n●\n\nMajority Board Independence: Under Israeli\nlaw, there is no requirement that the majority of the members of the board of directors be independent as under Nasdaq listing rule 5605(b)(1),\nso long as a company appoints at least two external directors pursuant to the Companies Law and fulfills the composition requirements\nfor the audit and compensation committees of the board. We comply with Israeli law in lieu of that Nasdaq requirement.\n\n \n\n \n●\nIndependent Director Oversight of Nominations: Under Israeli law, there is no requirement to have an independent nominating committee or the independent directors of a company select (or recommend for selection) director nominees, as is required under Nasdaq listing rule 5605(e) for a U.S. domestic issuer. Our board of directors handles this process, as is permitted by our articles and the Companies Law. We also need not adopt a formal board resolution or charter addressing the director nominations process and such related matters as may be required under the U.S. federal securities laws, as Nasdaq requires for a U.S. issuer.\n\n \n\n \n●\nShareholder Approval: Pursuant to Israeli law, we seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, which are different from, or in addition to, the requirements for seeking shareholder approval under Nasdaq listing rule 5635. See “Item 10. Additional Information- Memorandum and Articles of Association- Approval of Certain Transactions Under the Companies Law” in this annual report for a description of the transactions requiring shareholder approval under the Companies Law.\n\n \n\n \n●\nQuorums for Shareholders Meetings. The quorum for a shareholders meeting, as stipulated in our articles, complies with the provisions of Israeli law, and requires the presence, in person or by proxy of holders of 25% of our outstanding ordinary shares, in lieu of the requirement specified in Nasdaq listing rule 5620(c) under which the quorum for any shareholders meeting shall not be less than 33 and 1/3;% of the outstanding voting shares of a listed company.\n\n \n\n \n●\nRequired Timing for Annual Shareholders Meetings. Under the Companies Law, we are required to hold an annual shareholders meeting each calendar year and within 15 months of the last annual shareholders meeting, which differs from the corresponding requirement under Nasdaq listing rule 5620(a), which mandates that a listed company hold its annual shareholders meeting within one year of the company’s fiscal year-end."}