{"url_path":"/sec/forty/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MAJOR SHAREHOLDERS AND RELATED PARTY","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":3245,"has_tables":true,"body_markdown":"**ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY\nTRANSACTIONS**\n\n \n\n**A.**\n**Major Shareholders**\n\n \n\nThe following table presents\ninformation regarding the beneficial ownership (as defined in Form 20-F promulgated by the SEC) of Formula’s ordinary shares (including\nshares represented by ADSs) as of April 15, 2026 (except where an alternate date is specified in the footnotes to the table) by each person\nknown to us to be the beneficial owner of 5% or more of Formula’s ordinary shares, and by our directors and executive officers as\na group, based on information provided to us by our shareholders or disclosed in public filings with the SEC. None of the holders of the\nordinary shares listed in the below table has voting rights different from other holders of Formula’s ordinary shares. Except where\nindicated otherwise, we believe, based on information furnished by these owners, that each of the beneficial owners of Formula’s\nordinary shares listed below has sole investment and voting power with respect to such shares.\n\n \n\nName \nNumber of  Ordinary\n\nShares\nBeneficially Owned (1)  \nPercentage of\n\nOwnership (2) \n\nAsseco Poland S.A. (3) \n 3,958,154  \n 25.82%\n\nGuy Bernstein (4) \n 1,797,973  \n 11.73%\n\nHarel Insurance Investments & Financial Services Ltd.(5) \n 913,043  \n 5.95%\n\nMenora Mivtachim Holdings Ltd.(6) \n 1,099,812  \n 7.17%\n\nPhoenix Holdings Ltd. (7) \n 1,011,904  \n 6.60%\n\nYelin Lapidot Holdings Management Ltd. (8) \n 1,038,923  \n 6.78%\n\nClal Insurance Enterprises Holdings Ltd. and affiliates (9) \n 824,703  \n 5.38%\n\nMeitav Investment House Ltd.(10) \n 819,837  \n 5.35%\n\nAll directors and executive officers as a group (11 persons) (11) \n 1,840,484  \n 12.0%\n\n \n\n(1)\nBeneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, or the SEC, and generally includes voting or investment power with respect to securities. Ordinary shares underlying options currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the ownership percentage of the person holding such options but are not deemed outstanding for computing the ownership percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them.\n\n \n\n(2)\nThe percentages shown are based on 15,332,667 ordinary shares (including 119,808 shares represented by ADSs) issued and outstanding as of April 15, 2026.\n\n \n\n(3)\nBased on Amendment No. 5 to Schedule 13D filed by Asseco Poland S.A., or Asseco, with the SEC on December 7, 2022. Due to the public ownership of its shares, Asseco is not controlled by any other corporation or any one individual or group of shareholders.\n\n \n\n(4)\nBased on Amendment No. 4 to Schedule 13D filed by Mr. Bernstein with the SEC on December 7, 2022. Consists of (a) (i) 1,362,822 ordinary shares held in trust for Mr. Bernstein, and (b) an additional 435,151 ordinary shares held by Mr. Bernstein.\n\n \n\n(5)\nBased on written notification received from Harel Insurance Investments & Financial Services Ltd., or Harel Insurance, on April 9, 2026. Harel Insurance is a publicly held Israeli corporation. Out of the 913,043 ordinary shares beneficially owned by Harel Insurance: (i) 912,599 are held for members of the public through, among others, provident funds and/or mutual funds and/or pension funds and/or insurance policies and/or exchange traded funds, which are managed by subsidiaries of Harel Insurance, each of which subsidiaries operates under independent management and makes independent voting and investment decisions; and (ii) 444 ordinary shares are beneficially held for Harel Insurance’s own account.\n\n \n\n(6)\nBased on written notification received from Menora Mivtachim Holdings Ltd., or Menora Holdings, on April 5, 2026. Out of the 1,099,812 ordinary shares beneficially owned by Menora Holdings, (i) 1,094,039 ordinary shares are beneficially owned by Menora Holdings and by entities that are direct or indirect, wholly owned or majority-owned, subsidiaries of Menora Holdings. The economic interest or beneficial ownership in a portion of the foregoing ordinary shares (including the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such shares) is held for the benefit of insurance policy holders, the owners of portfolio accounts, or the members of the mutual funds, provident funds, or pension funds, as the case may be, and (ii) 5,773 ordinary shares are beneficially held for Menora Holdings’ own account.\n\n \n\n146\n\n \n\n \n\n(7)\nBased on written notification received from Phoenix Holdings Ltd. on April 6, 2026. The ordinary shares held by Phoenix Holdings are beneficially owned by various direct or indirect, majority or wholly-owned subsidiaries of Phoenix Holdings, or the Phoenix Subsidiaries. The Phoenix Subsidiaries manage their own funds and/or the funds of others, including for holders of exchange-traded notes or various insurance policies, members of pension or provident funds, unit holders of mutual funds, and portfolio management clients. Each of the Phoenix Subsidiaries operates under independent management and makes its own independent voting and investment decisions. As of March 31, 2025, the securities reported herein were held as follows: (i) the Phoenix Investments House - trust funds: 292,798; (ii) The Phoenix pension and provident funds: 4,873; and (iii) Partnership for Israeli shares: 714,233. (All ownership rights in these partnerships belong to companies that are part of Phoenix Group. The amount of ownership rights held by such companies in the partnership changes frequently according to a mechanism provided in the partnership agreement).\n\n \n\n(8)\nBased on written notification received from Yelin Lapidot on April 6, 2026. Out of the 1,038,923 ordinary shares beneficially owned by Yelin: (i) 851,755 are beneficially owned by provident funds managed by Yelin Lapidot Provident Funds Management Ltd., or Yelin Provident, and (ii) 187,168 are beneficially owned by mutual funds managed by Yelin Lapidot Mutual Funds Management Ltd., or Yelin Mutual. Each of Yelin Provident and Yelin Mutual is a wholly-owned subsidiary of Yelin. Messrs. Dov Yelin and Yair Lapidot each own 24.38% of the share capital and 25.004% of the voting rights of Yelin Lapidot, and are responsible for the day-to-day management of Yelin Lapidot Holdings. The ordinary shares beneficially owned are held for the benefit of the members of the provident funds and the mutual funds. Each of Yelin, Yelin Provident, Yelin Mutual and Messrs. Yelin and Lapidot disclaims beneficial ownership of the subject ordinary shares.\n\n \n\n(9)\nBased on written notification received from Clal Insurance Enterprises Holdings Ltd., or Clal, on April 12, 2026. Clal is a publicly held Israeli corporation. All the 824,703 ordinary shares beneficially owned by Clal are held for members of the public through, among others, provident funds and/or mutual funds and/or pension funds and/or insurance policies and/or exchange traded funds, which are managed by subsidiaries of Clal, each of which subsidiaries operates under independent management and makes independent voting and investment decisions\n\n \n\n(10)\nBased on a Schedule 13G filed by Meitav Investment House Ltd., or Meitav,\non April 13, 2026. The securities reported for this shareholder are beneficially owned by various direct or indirect, majority or wholly-owned\nsubsidiaries of Meitav. Some of the securities are held by third-party client accounts managed by subsidiaries of Meitav as portfolio\nmanagers, which subsidiaries operate under independent management and make independent investment decisions and have no voting power\nin the securities held in such client accounts. The subsidiaries manage their own funds and/or the funds of others, including for holders\nof exchange-traded notes or members of pension or provident funds, unit holders of mutual funds, and portfolio management clients. Each\nof the subsidiaries operates under independent management and makes its own independent voting and investment decisions. As of April\n10, 2026, 246,182 ordinary shares are beneficially owned by Meitav Tachlit Mutual Funds Ltd., 414,635 ordinary shares are beneficially\nowned by Meitav Provident Funds & Pension Ltd., and 159,020 ordinary shares are beneficially owned by Meitav Portfolio Management\nLtd.\n\n \n \n\n(11)\nIncludes the shares beneficially owned by Mr. Guy Bernstein described in footnote (4) above, as well as 24,333 vested restricted shares granted to Mr. Asaf Berenstin, the Company’s chief financial officer, on November 13, 2014 and on August 17, 2017 under the Company’s 2011 Plan. Besides Mr. Bernstein, Mr. Berenstin, and Ms. Maya Solomon-Ella, the Company’s chief operations officer (who was granted 25,000 restricted shares in November 2018 and in January 2023, of which 14,285 are vested), none of our other directors or executive officers beneficially owns any ordinary shares (whether actual ordinary shares or shares issuable upon exercise of options).\n\n \n\n*Recent Significant Changes in Holdings\nof Major Shareholders*\n\n \n\nOn March 30, 2023, Asseco\nacquired an additional 42,553 of our ordinary shares, representing 0.28% of our outstanding share capital as of March 31, 2023, in the\nopen market.\n\n \n\n147\n\n \n\n \n\n*Record Shareholders*\n\n \n\nAs of April 30, 2025, we had\none shareholder of record, which was not a United States record holder. The number of record holders is not representative of the number\nof beneficial holders of our ordinary shares, as the shares of all shareholders (including shares represented by ADSs) are recorded in\nthe name of our Israeli share registrar, Mizrachi Tefahot Registration Company Limited. All of our ordinary shares (including shares represented\nby ADSs) have equal voting rights. However, under applicable Israeli law, the shares that we have repurchased and currently hold have\nno voting rights and, therefore, are excluded from the number of our outstanding shares.\n\n \n\n*Record ADS Holders*\n\n* *\n\nAs of April 30, 2026, 119,257\nof our ADSs were issued and outstanding pursuant to a depositary agreement with The Bank of New York Mellon, representing approximately\n0.78% of our outstanding ordinary shares. As of that date, there were approximately 20 registered holders of our ADSs, of whom approximately\n11 record holders were United States residents. Such number of record holders is not representative of the actual number of beneficial\nholders of our ADSs in the United States.\n\n \n\n*Potential Change in Control\nTransactions*\n\n* *\n\nWe are unaware of any arrangements\nwhich may at a subsequent date result in a change in control of Formula.\n\n \n\n**B.**\n**Related Party Transactions**\n\n \n\n*Indemnification of Office Holders*\n\n \n\nWe have undertaken to indemnify\neach of our office holders. Our office holders’ indemnification letters provide, among other things, that we will indemnify each\nof our office holders to the maximum extent permitted by our articles. Advance payments for coverage of legal expenses in criminal proceedings\nwill be required to be repaid by an office holder to the company if such office holder is found guilty of a crime which requires proof\nof criminal intent, or if it is determined that the office holder is not lawfully entitled to such indemnification.\n\n \n\nAll of the indemnification\nletters granted to our office holders are identical, including indemnification letters granted to office holders who are or may be considered\n“controlling persons” under the Companies Law.\n\n \n\nThe indemnification is limited\nto the expenses and matters detailed in the indemnification letters insofar as they result from an office holder’s actions in connection\nwith, among other things, the following matters: the offering of securities by us to the public or to private investors; the offer by\nus to purchase securities from the public, private investors or other holders, whether pursuant to a prospectus, agreement, notice, report,\ntender or any other proceeding; our labor relations and/or employment matters and our trade relations; the development or testing of products\ndeveloped by us, or the distribution, sale, license or use of such products; and occurrences in connection with investments made by us.\n\n \n\nOur undertaking for indemnification\nis limited to up to 25% of our shareholders’ equity as it appears in our latest financial statements known at the date of indemnification,\ncalculated with respect to each director and officer of Formula.\n\n \n\n148\n\n \n\n \n\nOur undertaking for indemnification\ndoes not apply to a liability incurred as a result of any of the following:\n\n \n\n \n(i)\na breach by an office holder of his or her fiduciary duty, except, to the extent permitted by law, for a breach while acting in good faith and having reasonable cause to assume that the action was in our best interest;\n\n \n\n \n(ii)\na grossly negligent or intentional violation of the office holder’s duty of care;\n\n \n\n \n(iii)\nan intentional action in which the office holder intended to reap a personal gain illegally;\n\n \n\n \n(iv)\na fine, civil fine or financial sanction levied against and/or imposed upon the office holder;\n\n \n\n \n(v)\na proceeding instituted against the office holder pursuant to the provisions of Chapter H’3, H’4 or I’1 under the Securities Law, except as otherwise permitted in the undertaking; or\n\n \n\n \n(vi)\na counterclaim brought by us or in our name in connection with a claim against us filed by the office holder, other than by way of defense or by way of third party notice in connection with a claim brought against the office holder by us, or in specific cases in which our board of directors has approved the initiation or bringing of such suit by the office holder, which approval shall not be unreasonably withheld.\n\n \n\nWe are not required to indemnify\nan office holder if the office holder, or anyone on his or her behalf, already received payment in respect of a liability subject to indemnification,\nunder an effective insurance coverage or an effective indemnification arrangement with a third party. However, if that payment made to\nthe office holder does not cover the entire liability subject to the indemnification, we will indemnify the office holder in respect of\nthe difference between the amount paid to the office holder and the liability subject to the indemnification.\n\n \n\n*Office Holders’ Insurance*\n\n \n\nWe have obtained an insurance\npolicy covering the Formula Group’s D&O liability. Our subsidiaries participate in the premium payments of the insurance policy,\non a proportional basis. The current coverage of that policy is up to a maximum of $30.0 million both per incident and in the aggregate,\nplus $10.0 million of Side A DIC coverage, for a total premium of $369,111 for the period starting on February 25, 2026 and ending on\nAugust 24, 2027. The total annual premium of $369,111 under that policy is allocated for payment among our subsidiaries excluding Matrix\nand Michpal.\n\n \n\n*Service Agreement with our Chief Executive\nOfficer*\n\n \n\nWe are party to a written\nservice agreement with our chief executive officer, Mr. Guy Bernstein, which was entered into in December 2008 and was amended in March\n2011 and in March 2012. This agreement provides for early termination by either side upon 180 days’ advance written notice, during\nwhich time the Chief Executive Officer will continue to receive service fees. This agreement furthermore contains customary provisions\nregarding nondisclosure, confidentiality of information and assignment of inventions. Please see “*Item 6. Directors, Senior Management\n& Employees— B. Compensation-Service Agreement with, and Equity Grant to, Chief Executive Officer*” for more details\nconcerning that service agreement.\n\n \n\n*Services Obtained from Asseco*\n\n \n\nDuring 2025, Asseco provided\nback-office services, professional services and fixed assets to Sapiens’ wholly-owned subsidiary, Sapiens Poland (which was our\naffiliate until consummation of the merger transaction whereby Sapiens was acquired by Advent in December 2025), in an amount totaling\napproximately $0.2 million.\n\n \n\n149\n\n \n\n \n\n*Services Provided to Asseco*\n\n \n\nDuring 2025, Sapiens Poland\n(our former affiliate, until December 2025) performed services as a sub-contractor on behalf of Asseco for clients of Asseco in a total\namount of approximately $3.4 million. For historical reasons, Asseco issues invoices to those clients and then Sapiens, in turn, invoices\nAsseco on a back-to-back basis (with no margin to Asseco).\n\n \n\n*Fees Paid for Board Services in Affiliates*\n\n \n\nOur former subsidiary (until\nDecember 2025) Sapiens paid us approximately $39,488 in respect of its share of Formula’s director fees for Guy Bernstein, who also\nserves as Sapiens’ Chairman of the Board, for the year ended December 31, 2025.\n\n \n\nMatrix paid us approximately\n$30,015 in respect of its share of Formula’s director fees for Guy Bernstein, who also serves as Matrix’s Chairman of the\nBoard, for the year ended December 31, 2025.\n\n* *\n\n*Acquisition of Sapiens*\n\n* *\n\nOn August 12, 2025, Sapiens\nentered into an Agreement and Plan of Merger with certain affiliates of Advent, a leading global private equity investor, pursuant to\nwhich, on December 17, 2025, Sapiens merged with, became a wholly owned, privately-held subsidiary of affiliates of Advent. While the\npublic shareholders of Sapiens received $43.50 of cash consideration per Sapiens common share held by them in the merger, and were cashed\nout in the transaction, Formula retained an indirect minority interest in Sapiens following the transaction of approximate 18.68% through\nits ownership stake in SI Swan UK Topco Limited, which serves as the ultimate parent company of Sapiens. The transaction was approved\nby a special committee comprised solely of disinterested and independent members of the board of directors of Sapiens, as well as by an\nextraordinary general meeting of Sapiens’ shareholders held in November 2025. For more information concerning the transaction and\nthe related merger agreement, please see “*Item 10. Additional Information— C. Material Contracts— Merger Agreement\nfor Acquisition of Sapiens by Advent*” below in this annual report.\n\n* *\n\n*Merger Between Matrix and Magic Software*\n\n \n\nOn November 3, 2025, two\nof Formula’s publicly-traded subsidiaries— Matrix and Magic Software— entered into a merger agreement with one another\nand with Matrix’s wholly-owned subsidiary, Magitrix Ltd., and on February 24, 2026, the parties completed a reverse triangular merger\ncontemplated by that agreement. Pursuant to the merger, Matrix’s wholly-owned subsidiary merged with and into Magic Software, with\nMagic Software surviving as a wholly-owned subsidiary of Matrix. As consideration for their shares of Magic Software surrendered in the\nmerger, Magic Software shareholders received an aggregate of 28,861,564 ordinary shares of Matrix, representing 0.5878202 Matrix\nordinary shares for each Magic Software ordinary share held by them. That exchange rate resulted in Matrix’s and Magic Software’s\nshareholders owning 68.875% and 31.125%, respectively, of Matrix’s issued and outstanding ordinary shares post-merger on a fully\ndiluted basis.\n\n \n\nUpon completion of the merger,\nthe ordinary shares of Matrix continue to be traded exclusively on the TASE, while Magic Software’s ordinary shares were delisted\nfrom trading on Nasdaq and the TASE, and were deregistered under the Exchange Act.\n\n \n\nThe merger was approved\nby an independent committee of directors, the audit committee and board of directors of each of Matrix and Magic Software, each of which\nobtained a separate fairness opinion from an independent financial advisor confirming that the merger consideration was fair to the shareholders\nof that company. The merger was furthermore approved by meetings of the shareholders of each of Matrix and Magic Software, held on December\n10, 2025, by a special majority of the minority shareholders, as required under Israeli law.\n\n \n\nFor more information concerning\nthe merger between Matrix and Magic Software, please see “*Item 10. Additional Information— C. Material Contracts—\nMatrix- Magic Software Merger Agreement*” below in this annual report.\n\n* *\n\n150\n\n \n\n* *\n\n*Trade Receivables*\n\n* *\n\nAs of December 31, 2025, we\nhad trade receivables balances due from our related parties in a total amount of approximately $0.7 million, respectively.\n\n \n\n*Other Transactions*\n\n \n\nFrom time to time, in our\nordinary course of business, we engage in non-material transactions with our subsidiaries and affiliates where the amount involved in,\nand the nature of, the transactions are not material to any party to the transaction. We believe that these transactions are made on an\narms’ length basis upon terms and conditions no less favorable to us, our subsidiaries and affiliates, as we could obtain from unaffiliated\nthird parties. If we engage with our subsidiaries and affiliates in transactions which are not in the ordinary course of business, we\nreceive the approvals required under the Companies Law. These approvals include audit committee approval, board approval and, in certain\ncircumstances, shareholder approval. See “*Item 6.C. Board Practices*.”\n\n \n\n**C.**\n**Interests of Experts and Counsel**\n\n \n\nNot applicable."}