Georgia Just Rewrote the Rules for Shareholder Litigation

HB 1185 takes effect July 1, 2026 — the most significant shift in Georgia corporate governance law in years.

Poole Huffman, LLC  ·  June 2026  ·  Effective July 1, 2026

Governor Brian Kemp recently signed HB 1185, a sweeping reform package modernizing Georgia’s corporate governance and shareholder litigation framework. Effective July 1, 2026, the law positions Georgia alongside Delaware, Nevada, and Texas, giving companies greater certainty, stronger officer protections, and more control over where disputes are resolved. Five reforms define the new landscape.

REFORM 01

Lock in Business Court jurisdiction

HB 1185 expands Georgia’s State-wide Business Court to cover derivative actions, fiduciary duty claims, valuation proceedings, books and records inspections, and disclosure challenges. Corporations can now amend their charters or bylaws to require all such claims be filed exclusively there, eliminating forum-shopping. The removal deadline extends from 60 to 90 days (up to one year with consent), and for internal entity claims, the Business Court cannot decline jurisdiction.

REFORM 02

Require a real ownership stake to sue

Public corporations and publicly listed limited partnerships can now require that any shareholder bringing a derivative suit hold at least 1% of outstanding shares. This filters out nuisance suits from plaintiffs with no meaningful economic stake.

REFORM 03

Officers get the same liability shield as directors

HB 1185 closes a long-standing gap: for the first time, Georgia corporations can adopt charter provisions limiting or eliminating officer liability for monetary damages: the same protection directors have had for years. Exceptions remain for intentional misconduct, willful violations of law, misappropriation of corporate opportunities, unlawful distributions, and self-dealing.

WHY THIS MATTERS

Executives weigh litigation exposure when deciding where to work and how boldly to lead. Extending exculpation to officers levels the playing field with Delaware and reduces a disadvantage that had quietly cost Georgia companies talent.

REFORM 04

End of the mootness fee shakedown

Under HB 1185, amending shareholder disclosures (regardless of materiality) no longer qualifies as a “substantial benefit to the corporation” required to award plaintiffs’ attorney fees. The practice of filing disclosure challenges solely to extract a settlement fee from companies amending their M&A proxies is now significantly curtailed in Georgia.

REFORM 05

Books and records demand cuts both ways now

Courts no longer must award costs to shareholders who successfully compel a books and records inspection. If a corporation refused in good faith, courts have discretion to deny the award. Courts can now also award fees to corporations when inspection demands lack good faith or proper purpose — and pending derivative litigation no longer qualifies as a “proper purpose” to demand records.

What to do before July 1

Most of HB 1185’s protections are opt-in, but some are not. Potential plaintiffs should determine whether they should file suit before the July 1 effective date.

Frequently Asked Questions

HB 1185 — Georgia Corporate Law FAQ

Questions Georgia business owners and corporate counsel are asking. Answered by Poole Huffman, LLC.

What is Georgia HB 1185 and when does it take effect?

Georgia HB 1185 is a comprehensive corporate governance and shareholder litigation reform bill signed by Governor Brian Kemp and effective July 1, 2026. It modernizes Georgia’s framework for resolving internal corporate disputes, introduces new liability protections for corporate officers, restricts certain shareholder litigation tactics, and expands access to Georgia’s State-wide Business Court.

Does HB 1185 apply to existing corporations or only new ones?

It applies to both. However, most of the law’s key protections — officer exculpation, exclusive Business Court forum designations, and derivative standing thresholds — are opt-in provisions requiring a charter or bylaw amendment. Existing corporations will not receive these protections automatically and should work with counsel to update their governing documents.

What is officer exculpation under HB 1185?

Officer exculpation allows a corporation to include a provision in its articles of incorporation limiting or eliminating an officer’s personal liability for monetary damages. Prior to HB 1185, only directors could be exculpated under Georgia law. The protection does not cover intentional misconduct, willful violations of law, misappropriation of corporate opportunities, unlawful distributions, or self-dealing transactions.

Can a Georgia corporation require all shareholder disputes to be heard in the Business Court?

Yes. Corporations can adopt charter or bylaw provisions designating Georgia’s State-wide Business Court as the sole and exclusive forum for internal entity claims — including derivative actions, fiduciary duty claims, valuation proceedings, books and records demands, and disclosure challenges. Once properly designated, the Business Court cannot decline to hear these claims.

What is a derivative standing threshold and should my company adopt one?

A derivative standing threshold is a minimum ownership requirement a shareholder must meet before bringing a derivative lawsuit on behalf of the company. HB 1185 allows public Georgia corporations to set this threshold at up to 1% of outstanding shares. It is a useful filter against nuisance litigation from shareholders with minimal economic stakes — whether to adopt one depends on your company’s ownership structure and litigation history.

How does HB 1185 change books and records inspections in Georgia?

Prior law required automatic cost awards to shareholders who successfully compelled inspections. HB 1185 gives courts discretion to deny those awards when a corporation refused in good faith, and enables corporations to recover fees when demands lack good faith or proper purpose. It also narrows the definition of “proper purpose” by excluding pending derivative proceedings.

Does HB 1185 make Georgia a better choice than Delaware for incorporation?

HB 1185 narrows the gap significantly. Georgia now offers officer exculpation, exclusive forum designations, derivative standing thresholds, and mootness fee protections that rival Delaware’s framework. Georgia’s Business Court is growing in expertise. For companies with Georgia-based operations and shareholders, incorporating in Georgia is now a genuinely competitive option. Companies with complex multi-state ownership or large institutional investor bases may still prefer Delaware’s deeper body of case law.

Questions about HB 1185 and your Georgia corporation?

Poole Huffman, LLC handles business and commercial litigation throughout Georgia.