Georgia’s 2026 Business Court Expansion and the Future of Shareholder Disputes
Shareholder disputes can expose conduct that reaches far beyond a disagreement over ownership. Diverted corporate opportunities, self-interested transactions, misuse of company assets, withheld financial information, and decisions that reduce an ownership interest can lead to fiduciary-duty claims and other serious business-tort disputes.
Georgia changed the litigation landscape for many of these conflicts when House Bill 1185, enacted as Act 460, took effect on July 1, 2026. The legislation expands the Georgia State-wide Business Court’s role in shareholder and internal company disputes, including derivative actions, valuation proceedings, records demands, and disputes shaped by corporate governing documents.
When misconduct inside a company develops into a shareholder dispute, guidance from a knowledgeable Alpharetta business torts lawyer can help determine how the new framework affects the claims and where the case may proceed.
More Shareholder Disputes Fall Within the Business Court’s Role
HB 1185 created a new definition that brings several kinds of internal business disputes under one statutory umbrella. Georgia Code § 14-1-1 defines an “internal entity claim” to include derivative claims, disputes involving duties owed by current or former directors, officers, shareholders, members, or partners, valuation proceedings, court-ordered records inspections, and certain claims involving corporate disclosures.
Georgia Code § 15-5A-3 now expressly places internal entity claims within the State-wide Business Court’s authority, giving shareholder disputes involving diverted opportunities, concealed transactions, self-dealing, or misuse of corporate property a clearer path into the specialized court.
Derivative Actions Face New Barriers for Some Shareholders
A derivative action belongs to the corporation even though a shareholder brings the lawsuit on its behalf. These cases can arise when those controlling the company decline to pursue claims over self-dealing, diverted assets, improper payments, or other conduct alleged to have harmed the business.
For certain corporations whose covered shares trade on a national securities exchange, HB 1185 allows the articles or bylaws to establish an ownership threshold for shareholders seeking to bring derivative proceedings. The threshold cannot exceed one percent of the applicable outstanding shares.
The legislation also changes the financial incentives surrounding some derivative litigation. Additional or amended disclosures to shareholders, standing alone, no longer qualify as a substantial benefit to the corporation for purposes of an award of plaintiffs’ expenses and attorney fees.
Fiduciary-Duty Claims Fit Within the Expanded Framework
Shareholder conflicts often intensify when the dispute involves conduct by someone entrusted with corporate authority. A director may participate in a transaction that produces a personal benefit. An officer may redirect an opportunity that belonged to the company. Controlling owners may make decisions that place their interests ahead of the business or other shareholders.
Georgia Code § 14-1-1 places claims involving duties owed by directors, officers, shareholders, members, and partners within the definition of an internal entity claim when those duties arise from or relate to the entity’s internal affairs.
The same conduct can support internal corporate claims and business-tort allegations. Self-dealing may lead to a fiduciary-duty claim, while concealed transactions or diverted property can support fraud, conversion, or related tort theories.
Valuation Proceedings Can Move Into Business Court
Shareholder litigation frequently turns on the value of an ownership interest. A corporate transaction may leave an owner disputing the price assigned to shares, while another conflict may require the company to purchase an ownership interest at a value determined through a statutory proceeding.
HB 1185 allows certain corporate valuation proceedings to be commenced in the Georgia State-wide Business Court as an alternative to the designated superior court. It extends similar Business Court access to qualifying LLC valuation proceedings.
Alleged misconduct can directly affect what an ownership interest is worth. Diverted revenue, excessive payments, undisclosed transactions, or misuse of company assets can reduce company value and deepen a dispute over what an owner should receive.
Records Demands Face New Restrictions Before Shareholder Litigation
Financial records can reveal where company money went, who approved a transaction, or how directors handled a potential conflict. Shareholders investigating suspected misconduct have often relied on statutory inspection rights to seek corporate information.
HB 1185 narrows the meaning of a proper purpose for certain corporate records demands. An active or pending derivative proceeding that the shareholder is pursuing, or reasonably expects to pursue, does not qualify as a proper purpose under the amended law. The same restriction reaches an active or pending civil lawsuit in which the corporation and shareholder are, or are reasonably expected to become, adversarial named parties.
The legislation also permits court-ordered inspection proceedings to be brought in the Business Court and gives courts discretion over fee awards connected to those demands. A rejected request made without good faith or a proper purpose can expose the shareholder to the corporation’s costs and reasonable attorney fees. Limits on access to internal records can affect when evidence of self-dealing, diverted assets, or other fiduciary misconduct comes to light.
Corporate Documents Can Determine the Forum Before a Dispute Begins
HB 1185 gives Georgia corporations greater control over where internal disputes are heard. Articles of incorporation and bylaws may now require internal entity claims to be brought solely and exclusively in the Georgia State-wide Business Court.
A forum provision adopted before any dispute arises can later determine where an internal shareholder claim is heard. That can become significant when an ownership relationship deteriorates, and litigation follows.
HB 1185 also creates expanded routes for certain qualifying internal entity claims to reach Business Court after litigation begins in superior or state court. For companies that designate Business Court in their governing documents, forum language adopted before a shareholder conflict develops can later control where the dispute proceeds.
The 2026 Changes Reshape Future Shareholder Disputes
HB 1185 applies to claims and proceedings initiated on or after July 1, 2026. For closely held businesses, the expanded framework can become especially important when ownership conflict and alleged misconduct develop at the same time. Self-dealing, diverted opportunities, misuse of company assets, or concealed transactions can turn an internal shareholder conflict into a substantial business-tort dispute.
When those allegations arise alongside questions about ownership rights, governing documents, or the proper forum for the dispute, the path forward can become more complicated. Working with an Alpharetta business torts attorney can help determine how the company’s ownership structure, governing documents, alleged misconduct, and requested relief fit within Georgia’s expanded Business Court framework.
Contact Cheeley Law Group
If a shareholder dispute involves fraud, self-dealing, fiduciary misconduct, or misuse of company assets, Georgia’s new Business Court rules may affect where the dispute proceeds and which claims belong in that forum.
At Cheeley Law Group, we represent Georgia businesses and owners in serious commercial disputes involving misconduct that can threaten company value and ownership interests. Contact us to speak with an experienced Alpharetta business torts lawyer and learn how we can help protect your business interests and pursue relief for the harm caused.
Sources:
- Georgia General Assembly, House Bill 1185, Act 460
legis.ga.gov/legislation/72827 - Georgia Code § 14-1-1, Definitions — Internal Entity Claims
law.justia.com/codes/georgia/title-14/chapter-1/section-14-1-1/ - Georgia Code § 15-5A-3, Authority of the Georgia State-wide Business Court
law.justia.com/codes/georgia/title-15/chapter-5a/section-15-5a-3/ - Georgia Office of Legislative Counsel, Summary of General Statutes Enacted at the 2026 Session, Act 460 / HB 1185
legis.ga.gov/api/document/docs/default-source/general-statutes/sumdoc2026_finalb6de4f3e-b2e8-49d5-bc38-34c4f39c2207.pdf