The company signaled it would need the green light from California and Delaware policymakers as part of the restructuring plan.
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Artificial intelligence company OpenAI has signed a non-binding memorandum of understanding with its largest investor, Microsoft, to restructure its business.
In a Thursday notice, OpenAI the move, first proposed in May, would allow its for-profit arm to transition to a public benefit corporation, while the nonprofit would maintain control of the company.
Under the deal, the nonprofit arm will have a stake worth more than $100 billion in the public benefit corporation.
“OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit,” CEO Sam Altman in May. “That will not change.”
The company said it would “continue to work with the California and Delaware Attorneys General” as part of the restructuring plan, signaling the need to work with local policymakers.
OpenAI’s physical headquarters is in San Francisco, but the company is legally incorporated in Delaware.
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Founded in 2015 by tech figures including Elon Musk and Sam Altman, OpenAI launched as a nonprofit research lab focused on artificial intelligence. The company was responsible for the development of ChatGPT, one of the most significant large language models to arise in the last decade.
OpenAI was the target of heavy criticism in 2023 when its board of directors as CEO for allegedly being “not consistently candid in his communications.” He was reinstated in a matter of days after and many in the public.
The restructuring notice came about a month after OpenAI said it to reach a $300 billion valuation. The company is reportedly expected to generate $12.7 billion in total revenue in 2025.
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