OpenAI Board to Gain Voting Rights to Prevent Takeover

OpenAI Considers Board Voting Rights to Prevent Takeovers

Recent reports from the Financial Times indicate that OpenAI is evaluating measures to safeguard against potential hostile takeovers in the future.

Specifically, the company is contemplating granting its nonprofit board enhanced voting privileges.

Preserving Board Authority

These proposed rights would empower the board to override decisions made by significant investors.

This action is intended to maintain a degree of control for the board even after OpenAI finalizes its shift to a for-profit model.

OpenAI initially began as a nonprofit organization before adopting a “capped-profit” structure in 2019.

Restructuring to a Public Benefit Corporation

Currently, OpenAI is undergoing another restructuring process, transitioning towards becoming a public benefit corporation.

Rejected Acquisition Offer

A recent offer to acquire OpenAI’s nonprofit entity for $97.4 billion, spearheaded by a group of investors including Elon Musk, was unanimously declined by the board last week.

Despite the rejection, this offer highlights potential challenges to OpenAI’s ongoing restructuring plans.

Spinning Out the Nonprofit

OpenAI’s strategy involves separating its nonprofit arm, which will establish its own independent staff and leadership.

This separation is designed to allow the for-profit division to independently manage and operate OpenAI’s core business functions.

Investors have been assured that this conversion will be finalized by the end of 2026.