OpenAI Retains Nonprofit Control Amidst Restructuring Plans

OpenAI has abandoned its plan to become a fully commercial entity. Its nonprofit arm will retain control over the firm.

The business wing, which has been under the nonprofit’s management since 2019, will be converted into a Public Benefit Corporation (PBC). The nonprofit structure will remain a major shareholder and retain control over its operations.

PBCs are commercial companies legally required to prioritize a social mission alongside shareholder interests.

“OpenAI was founded as a nonprofit organization, and today it remains under its oversight and control. It will continue to do so,” said board chairman Bret Taylor.

OpenAI claims the decision was made “after listening to civic leaders and engaging in constructive dialogue with the offices of the Delaware Attorney General and the California Attorney General.”

“We thank both offices and look forward to continuing these important conversations to ensure OpenAI can effectively fulfill its mission,” said Taylor.

OpenAI was established as a nonprofit in 2015 but was transformed into a “capped-profit” company in 2019 to attract capital. The firm retained its nonprofit arm, which currently holds a controlling stake in the corporate division.

Co-founder Elon Musk disagreed with this decision and filed a lawsuit against the company. The lawsuit alleges that the AI startup and its two founders, Sam Altman and Greg Brockman, violated the founding agreement by prioritizing commercial interests over public good.

The billionaire sought a preliminary injunction to halt OpenAI’s transformation. A federal judge denied this motion but allowed the case to proceed to a jury trial in spring 2026.

Musk’s Response

Musk’s lawyer stated that OpenAI’s partial retreat from its restructuring plan “changes nothing,” and the billionaire may continue his legal campaign against the startup.

“OpenAI’s statement is a ghostly ruse that fails to address core issues: charitable assets have been and will be transferred to benefit private individuals, including Altman, his investors, and Microsoft,” said Mark Toberoff on Monday.

He added that the revised restructuring plan of the AI startup appears designed to avoid legal scrutiny but still contradicts the company’s foundational mission of developing AI for the benefit of all people.

“The founders’ mission remains betrayed,” he said.

The Importance of Restructuring

For OpenAI, the restructuring issue is critically important—it raised part of its capital on the condition that it would become commercial by December 31, 2025.

With the proposed structure, SoftBank is ready to invest $30 billion in a recently announced funding round, Altman reported.

In a letter to employees, he stated that OpenAI might require “trillions of dollars” to achieve its goal of making the company’s products widely accessible to all of humanity.

“[The nonprofit OpenAI] will become a major shareholder in the PBC to the extent confirmed by independent financial advisors. We are moving to a normal capital structure where everyone has shares. […] We look forward to developing the details [of our] plan in further negotiations with Microsoft and newly appointed nonprofit commission members,” Altman wrote.

Microsoft’s Final Say

Microsoft, OpenAI’s largest investor, did not grant permission for the transformation. Bloomberg reports this, citing sources.

The corporation wants to ensure that any changes protect its investments. Both companies continue to discuss the deal’s details.

Microsoft’s approval is crucial. Currently, only OpenAI insiders, Bill Gates’s firm, and other early investors have a direct say in approving the restructuring, the agency notes.

Back in June 2024, it was revealed that OpenAI intended to change its management structure to a commercial business.