The Delaware attorney general has formally requested additional details from OpenAI’s legal team regarding the company’s plans to shift from a nonprofit to a for-profit organization, as reported by Axios. Given OpenAI’s registration in Delaware, the attorney general has the authority to review the company’s restructuring plans, which could influence its future direction. This request responds to reports suggesting OpenAI’s intention to reclassify its structure. Kathleen Jennings, the Delaware attorney general, noted the importance of her office having the opportunity to examine any reorganization terms before completion, emphasizing that “the current beneficiaries of OpenAI have an interest in ensuring that charitable assets are not transferred to private parties without proper consideration.”
OpenAI’s Shift Towards Profit
Initially founded as a nonprofit focused on advancing AI for the benefit of humanity, OpenAI attracted significant investment from Microsoft and other firms over the years. In 2023, these investors requested formal confirmation of OpenAI’s shift to for-profit status, establishing a two-year timeline for the transformation. If this timeline is not met, OpenAI may need to return the invested funds. OpenAI confirmed receipt of the Delaware attorney general’s request and expressed its willingness to address questions, reaffirming its commitment to the restructuring plan, notes NIXSolutions.
Commitment to Mission and Transparency
OpenAI’s Chairman Bret Taylor stated that the nonprofit’s Board of Directors remains committed to fulfilling fiduciary responsibilities and advancing OpenAI’s mission to benefit humanity. Taylor noted, “We continue to consult with independent financial and business experts. Any possible restructuring will allow the nonprofit to exist and thrive while realizing full value for its current stake in OpenAI’s for-profit entity with expanded capabilities to pursue its mission.”
While restructuring a nonprofit into a for-profit entity presents complex legal and operational challenges, industry experts believe OpenAI has viable paths forward. Delaware has a history of involvement in similar cases, both with nonprofit and for-profit entities. We’ll keep you updated on this process and any potential impacts on OpenAI’s structure and mission.