Georgia’s HB 1185 Takes Effect – Reshaping Corporate Governance and Shareholder Litigation

As of July 1, 2026, House Bill 1185 is in effect. It includes major reforms to Georgia’s corporate governance and shareholder litigation framework. The law’s most consequential change extends to corporate officers the exculpation framework Georgia has long afforded directors, allowing companies to eliminate or limit officer liability for monetary damages arising from breaches of the duty of care, subject to carve-outs for appropriation of business opportunities, intentional misconduct, knowing violations of law, unlawful distributions, and transactions involving improper personal benefits.

The law goes further than officer liability alone. It lets corporations designate the Georgia State-wide Business Court as the exclusive forum for “internal entity claims” — a category covering fiduciary duty claims, inspection demands, valuation proceedings, and disclosure claims — and the Business Court cannot reject such forum-selection provisions once adopted for internal entity claims. It also creates a new standing hurdle for derivative suits, letting public companies impose an ownership threshold of up to 1% of outstanding shares before a shareholder can bring a derivative claim. Attorney’s fees are no longer a given for shareholders who successfully compel an inspection of books and records, and pending derivative litigation is no longer a “proper purpose” to demand records. Corporations can in good faith refuse an inspection demand and may be awarded fees if the demand lacks good faith or a proper purpose.

Importantly, most of these protections are opt-in. Officer exculpation, exclusive Business Court forum designations, and derivative standing thresholds all require a charter or bylaw amendment, and existing corporations won’t receive them automatically. While the most immediate impact falls on public companies, the reforms are also relevant to private Georgia corporations, including PE portfolio companies, venture-backed businesses, and family-owned corporations, particularly where officers face duty-of-care exposure in financings, recapitalizations, or exit transactions.

Companies should work with counsel to review governing documents in light of these changes, and private companies in particular should check shareholder agreements and investor consent rights before amending.