OpenAI's Recapitalisation — The For-Profit Becomes a PBC, the Nonprofit Keeps Control

On 28 October 2025, OpenAI announced that its recapitalisation was complete. Bret Taylor, chair of the board, put the claim in the first line of his post: the nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.

It was the largest change to the corporate container since 2019, when a capped-profit subsidiary was grafted onto a research nonprofit. It was also the day the ceiling that structure imposed on fundraising came off.

The New Two-Storey Structure

The shape is simple enough to state.

• The nonprofit, OpenAI, Inc., is now the OpenAI Foundation.
• The for-profit limited liability company was recapitalised into OpenAI Group PBC, a Delaware public benefit corporation.
• Both carry the same mission: ensuring that artificial general intelligence benefits all of humanity.

Control lives in a share class. The Foundation holds Class N Common Stock, and for as long as it does, it alone appoints and removes the directors of the PBC. The agreement with California's attorney general is explicit that the decision whether ever to give up the Class N shares rests with the nonprofit's own board.

The numbers come from OpenAI's own structure page. At closing the Foundation held 26 per cent of OpenAI Group, worth roughly US$130 billion at the company's then-current valuation. Microsoft held roughly 27 per cent; the remaining 47 per cent belonged to current and former employees and investors. The Foundation also holds a warrant: if the share price rises more than tenfold over fifteen years, it receives significant additional equity.

The valuation figure deserves a footnote. The widely quoted US$500 billion was not set by this transaction. It was the price struck in a US$6.6 billion secondary sale that closed on 2 October 2025, in which current and former employees sold to existing investors. Microsoft's disclosure — about US$135 billion for roughly 27 per cent — is consistent with that level rather than an independent valuation of it.

Alongside the structure, the Foundation announced an initial US$25 billion commitment across two areas: health and curing diseases, and technical solutions to AI resilience. That builds on a US$50 million People-First AI Fund already in place.

What the Attorneys General Extracted — Two Different Instruments

A nonprofit's assets are charitable assets, and their disposition is supervised by state attorneys general. Nearly a year of negotiation with the offices of California and Delaware preceded the closing. The documents that emerged were not of the same kind, and the difference matters.

California signed a Memorandum of Understanding, dated 27 October 2025 and executed by both Rob Bonta and OpenAI, Inc. Titled a Notice of Conditions of Non-Objection, it runs to twenty-six numbered paragraphs. Among them:

Delaware did not sign an MOU. On 28 October, Attorney General Kathy Jennings issued a Statement of No Objection — a unilateral instrument rather than a bilateral agreement. The substance overlaps heavily: sole nonprofit authority to appoint and remove PBC directors, an identical mission, mission-only consideration on safety, the SSC retained at the nonprofit level with power to halt releases, at least two nonprofit directors off the PBC board within a year, and advance notice of significant governance changes.

The two states are frequently summarised as having signed memoranda of understanding. Only one did. The form determines what each office can do next if the commitments are not kept.

The Microsoft Agreement — Putting a Verifier on AGI

Microsoft published its side the same day, describing a new definitive agreement. The consequential changes:

• Microsoft's IP rights to models and products are extended through 2032, and now include models developed after AGI is declared, with safety guardrails.
• Once AGI is declared by OpenAI, that declaration is verified by an independent expert panel.
• Rights to research IP — the confidential methods used in developing models and systems — run until the panel verifies AGI or through 2030, whichever comes first.
• The revenue share continues until the panel verifies AGI, with payments spread over a longer period.
• OpenAI contracted to buy an incremental US$250 billion of Azure services, and Microsoft gave up its right of first refusal as OpenAI's compute provider.
• Microsoft may pursue AGI alone or with third parties; if it uses OpenAI IP to do so before AGI is declared, the models are subject to compute thresholds.
• Microsoft's IP rights now exclude OpenAI's consumer hardware, and OpenAI may release open-weight models that meet capability criteria.

Since 2019, AGI had been the concept the partnership turned on: declare it, and Microsoft's commercial rights lapse. What the October 2025 agreement changed was not the trigger but the trigger-puller — the question became who gets to certify that the thing has happened.

That arrangement did not last long. On 27 April 2026 the two companies amended the agreement again. Microsoft's blog states three things: the licence through 2032 becomes non-exclusive; Microsoft will no longer pay a revenue share to OpenAI; and revenue-share payments from OpenAI to Microsoft continue through 2030, at the same percentage but subject to a total cap, "independent of OpenAI's technology progress". Neither the word AGI nor the expert panel appears anywhere in that post. Commentators read the omission as the clause having lost its force — but the parties did not publish a statement that they had removed it. What was published and what was inferred are worth keeping apart.

What Came Off With the Cap

At the time of the reported US$10 billion investment in January 2023, the for-profit was still inside the capped-profit structure: investor returns were bounded by a multiple, and everything above the cap flowed back to the nonprofit. As a piece of mission design it was coherent. As a vehicle for raising hundreds of billions on a rolling basis, it was a straitjacket.

The recapitalisation replaced it with ordinary stock. In OpenAI's phrasing, all equity holders now own the same type of traditional stock, participating proportionally in the growth of OpenAI Group. The nonprofit became a shareholder with uncapped upside — which is exactly why the Foundation can describe itself as one of the best-resourced philanthropic organisations ever.

The cost of that alignment is that the nonprofit's financial interest now points the same way as the business's. Where a safety decision means forgone revenue, alignment cuts the wrong way. Paragraphs 8 and 9 of the California MOU — consider only the mission on safety; the SSC can stop a release — are wedges driven precisely into that joint.

The Question the Jury Did Not Answer

The November 2023 board crisis had posed the question of what actually happens when "the nonprofit controls the for-profit" is put to the test. The recapitalisation is best read as an attempt to rewrite that arrangement into something that can be exercised without destroying the company in the process — enumerated approval rights, a named committee with a named chair, and a notice period owed to two state regulators.

The courtroom fight also resolved, if not on the merits. On 18 May 2026 a jury rejected all of Elon Musk's claims against Sam Altman and OpenAI, finding he had sued outside the three-year statute of limitations; the judge adopted the advisory verdict. Musk called it a technicality and said he would appeal. Whether the charitable trust was in fact breached was never decided.