Delaware Inquires of OpenAI

I told you last week that Public Citizen asked the California AG’s office to supervise OpenAI (c)(3)’s disposition of its assets as the Board seeks to reorganize the tax-exempt organization as a public benefit corporation. According to a report yesterday,  Delaware has apparently already began such an effort.  

From Axios, yesterday:

The Delaware attorney general sent a letter to OpenAI’s lawyers earlier this month asking for more information about the nonprofit company’s plan to convert to a for-profit entity, Axios has learned.  In the letter, AG Kathleen Jennings says she’s writing in response to reports that OpenAI is contemplating converting to a for-profit entity.  “If these reports are true, it is important that my office have an opportunity to review the terms of any such transaction prior to its consummation,” she writes. “The current beneficiaries of OpenAI have an interest in ensuring that charitable assets are not transferred to private interests without due consideration.”

I am not surprised that I can’t find the letter online.  I don’t expect the AG has posted the letter nor do I think someone in her office leaked it.  Pure speculation, I could be wrong. But Delaware is much too professional with its corporations to post or leak sensitive correspondence.  Delaware ain’t the top spot for corporations for nothing.  Anyway, here is some of OpenAI’s response as reported by Axios:

OpenAI has received the letter and looks forward to continuing discussions with the AG, “addressing their questions as we continue our ongoing work on this plan,” a company representative said in an email. “The Board of Directors of OpenAI Inc., the non-profit, is focused on fulfilling our fiduciary obligation by ensuring that the company is well-positioned to continue advancing its mission of ensuring AGI benefits all of humanity,” Bret Taylor, Open AI’s board chair, said in a statement. “[W]e continue to consult independent financial and legal advisors, any potential restructuring would ensure the nonprofit continues to exist and thrive, and receives full value for its current stake in the OpenAI for-profit with an enhanced ability to pursue its mission.”

darryll k. jones