Georgia Modernizes Corporate Code: Key Updates to Business Court Access and Shareholder Disputes

Georgia has enacted HB 1185, which updates the corporate governance and litigation framework applicable to Georgia companies. The legislation is effective July 1, 2026, and applies to claims or proceedings initiated on or after that date. HB 1185 can be viewed here in its entirety. 

Key changes are as follows:

Exclusive Business Court forum provisions. Georgia corporations may include in their articles of incorporation or bylaws a provision requiring “internal entity claims” – defined to include fiduciary duty claims, inspection demands, valuation proceedings and disclosure claims – to be brought exclusively in the Georgia State-wide Business Court.

Officer exculpation. Georgia corporations may now include provisions in their articles of incorporation eliminating or limiting monetary liability of officers, subject to customary exceptions, effectively extending the same exculpatory protections to officers that are currently available to directors.

Derivative-action ownership thresholds. Publicly traded Georgia corporations may adopt in their articles of incorporation or bylaws an ownership threshold for derivative litigation, capped at 1% of the outstanding shares.  The shareholder must own these shares at the time of the act or omission that is the subject of the litigation.

Inspection rights and fee shifting. The legislation narrows what qualifies as a “proper purpose” with respect to a demand to inspect a company’s books and records by specifying that a shareholder does not have a “proper purpose” if it has an active or pending derivative claim against the company, or if the company is a named adversarial party in active or pending litigation with the company.  Courts may also require a shareholder to pay the corporation’s costs if it determines that a shareholder’s demand was not made in good faith.  

Disclosure-only fee limits. The legislation provides that amended public disclosures, regardless of materiality, do not constitute a “substantial benefit to the corporation”, which is intended to curtail dubious challenges to merger transactions that seek only supplemental disclosures.