HB1185: HB1185 Courts; certain shareholder claims to be brought before the Georgia State-wide Business Court; provide

Georgia currently allows most business disputes to be filed in superior or state court, with the State-wide Business Court available in limited situations. This bill lets corporations, LLCs, and partnerships write into their governing documents, such as bylaws or articles of incorporation, a requirement that certain internal disputes (called 'internal entity claims'), like lawsuits over directors' duties, shareholder inspection of records, or valuation disputes, go directly to the Georgia State-wide Business Court. It also updates rules for who can bring a shareholder derivative lawsuit, sets a 1 percent ownership threshold companies can require for such suits involving publicly traded shares, and changes deadlines and procedures for moving cases into or out of the Business Court. The bill also revises when courts can award attorneys' fees in shareholder inspection and derivative cases, generally tightening the standard for awarding fees and clarifying that additional corporate disclosures alone do not count as a 'substantial benefit' justifying fees. The changes take effect July 1, 2026, and apply to claims or proceedings started on or after that date.

• Allows corporate bylaws or articles of incorporation to require that internal disputes involving directors, officers, or shareholders be brought only in the Georgia State-wide Business Court.
• Creates a new legal definition of 'internal entity claim' covering derivative lawsuits, duty-of-disclosure claims, valuation disputes, and shareholder record inspection cases.
• Sets a cap so that a company's ownership threshold for bringing a shareholder derivative lawsuit against a publicly traded company cannot exceed 1 percent of outstanding shares.
• Changes the deadlines for moving a case into or out of the Business Court, shortening some windows (for example from 60 to 30 or 15 days) and lengthening others.
• Limits when courts can award attorneys' fees in shareholder record-inspection disputes, requiring a hearing and clarifying that additional company disclosures alone do not count as a benefit justifying fee awards.
• Lets parties in existing superior or state court cases jointly agree, within one year, to move the case to the Georgia State-wide Business Court.

The bill affects Georgia corporations, limited liability companies, and limited partnerships; their shareholders, members, and partners; company directors and officers; and the Georgia State-wide Business Court and superior and state courts that currently hear these disputes.

Companies could steer shareholder lawsuits and internal disputes into a single specialized business court instead of local superior or state courts, changing where and how these cases are litigated. Shareholders challenging company decisions or seeking records may face new ownership thresholds, shorter filing deadlines, and tighter limits on recovering attorneys' fees.

• Section 1 adds a definition of 'internal entity claim' to a new O.C.G.A. § 14-1-1, covering derivative suits, disclosure claims, valuation proceedings, and record inspection disputes.
• Section 2 lets corporate articles of incorporation require that internal entity claims be brought solely in the Georgia State-wide Business Court (O.C.G.A. § 14-2-202).
• Section 3 allows corporate bylaws to impose the same requirement (O.C.G.A. § 14-2-206).
• Section 4 caps at 1 percent of outstanding shares the ownership threshold a company can require before a shareholder may bring a derivative suit involving publicly traded shares (O.C.G.A. § 14-2-741).
• Section 5 clarifies that additional or amended shareholder disclosures alone do not count as a 'substantial benefit to the corporation' for awarding attorneys' fees in derivative suits (O.C.G.A. § 14-2-746).
• Sections 7 through 18 add the Georgia State-wide Business Court as an alternative venue for various corporate, partnership, and LLC court actions, including valuation proceedings and record inspection disputes.
• Section 20 revises deadlines and procedures for transferring or removing cases into the Georgia State-wide Business Court, including a one-year window for agreed removals (O.C.G.A. § 15-5A-4).
• Section 21 sets the effective date as July 1, 2026, applying to claims or proceedings initiated on or after that date.

1. 2026-05-11Effective Date 2026-07-01
2. 2026-05-11Act 460
3. 2026-05-11House Date Signed by Governor (House)
4. 2026-04-10House Sent to Governor (House)
5. 2026-03-31House Agreed Senate Amend or Sub (House)
6. 2026-03-27Senate Passed/Adopted As Amended (Senate)
7. 2026-03-27Senate Taken from Table (Senate)
8. 2026-03-25Senate Tabled (Senate)

• Chuck Efstration (R, HD-104)Primary sponsor
• Matthew Gambill (R, HD-015)
• Will Wade (R, HD-009)
• Devan Seabaugh (R, HD-034)
• Stan Gunter (R, HD-008)
• Rob Leverett (R, HD-123)
• Bo Hatchett (R, SD-050)

1. PassedHouse voteFebruary 25, 2026

   104 yea, 66 nay (1 not voting, 6 absent)

   Passage: House Vote #566

2. FailedSenate voteMarch 25, 2026

   14 yea, 35 nay (2 not voting, 3 absent)

   Motion To Resolve Debate: Senate Vote #809

3. PassedSenate voteMarch 25, 2026

   27 yea, 23 nay (1 not voting, 3 absent)

   Motion To Table: Senate Vote #810

4. PassedSenate voteMarch 27, 2026

   45 yea, 2 nay (2 not voting, 5 absent)

   Passage As Amended: Senate Vote #871

5. PassedSenate voteMarch 27, 2026

   37 yea, 9 nay (3 not voting, 5 absent)

   Adoption Of Amendment #4 By The Senator From The 19th: Senate Vote #870

6. PassedHouse voteMarch 31, 2026

   97 yea, 65 nay (6 not voting, 8 absent)

   Agree To Senate Amendment: House Vote #828

• business court
• shareholder lawsuits
• corporate law
• court procedure
• attorneys' fees