OpenAI Plans Structural Changes to Become a Public Benefit Corporation

Investing.com -- OpenAI is considering restructuring its corporate model into a traditional profit-making company and a non-profit division.

As announced in a blog post published on Friday, the board is currently reviewing plans to transform OpenAI's operations into a public-benefit corporation—this structure aims to generate revenue while providing benefits to society. Meanwhile, the non-profit division will also be retained. As part of the proposed structure, the non-profit arm will hold shares in the profit-making entity.

The company has reportedly been in discussions with regulators in California and Delaware regarding the potential changes. The recent announcement suggests that the board is ready to move towards the restructuring.

OpenAI's current profit-making division is controlled by its non-profit organization. According to the proposed plan, the operation will become a Delaware Public Benefit Company (PBC). As indicated by OpenAI's board, the non-profit will continue to exist as one of the best-funded non-profit organizations in history and will hold a significant stake, represented by shares valued by independent financial advisors.

While a simplified profit-making structure may appear more attractive to investors, it could raise questions about whether the San Francisco-based company remains committed to its original public mission. OpenAI's co-founder and early investor Elon Musk filed a lawsuit against the company in August, claiming it violated its agreement to operate as a non-profit. Musk recently sought to prevent OpenAI's transition to a profit-making business by filing in federal court while his legal battle continues.

OpenAI's board stated that the proposed plan would ensure the long-term success of the company's profit-making arm. According to the writing, this plan will aid the non-profit organization in fundraising and fulfilling its mission more effectively. The board also noted that the evaluated plan would enhance the non-profit's ability to sustain charitable initiatives in areas such as healthcare, education, and science.