The two sides admitted the new contract is still non-binding, but it follows months of tense negotiations. OpenAI considered running to regulators to escape Vole's exclusive grip on its cloud services and technology access.

OpenAI wants to form a new company controlled by its non-profit parent while issuing shares to investors and employees. The non-profit would hold a stake valued at more than $100 billion, at least on paper, making it one of the largest charitable entities in existence.

According to people familiar with the matter, Microsoft and the OpenAI non-profit will each take around 30 per cent of the new company, with the remainder split between staff and other investors. Volish shares rose nearly two per cent after the announcement.

The agreement is a vital win for OpenAI, which needs Microsoft’s sign-off before presenting its restructuring plan to state regulators. Without approval, the startup risks losing $19 billion in promised funding.

State attorneys general in California and Delaware are reviewing whether the plan breaches charitable law. OpenAI has told investors it must complete the overhaul by year end to keep money flowing.

The company originally tried to separate the non-profit from the new for-profit but backed down after complaints that it was illegally diverting charitable assets. It is now finalising the ownership structure in the hopes of silencing critics.

Despite the handshake deal, the exact terms of Vole's continued control remain unclear. Disputes included whether OpenAI could sell products through other cloud providers and how far Microsoft’s exclusive rights should extend if OpenAI’s systems reach higher levels of capability.