March 28 (Reuters) - OpenAI must transition to a

for-profit company by the end of the year to secure the full $40

billion funding led by SoftBank it is in the final stages of

raising, a person familiar with the matter said on Friday.

SoftBank can pare back the size of the funding

round to $20 billion if Microsoft ( MSFT )-backed OpenAI fails

to restructure into a for-profit company by the end of the year.

The Wall Street Journal was the first to report the news

earlier in the day.

This would mark an accelerated deadline for OpenAI to

pull off its complicated transition. It was under a two-year

deadline from its last round of financing with investors.

The startup has said its transition to a for-profit

entity is required to secure the capital it needs to develop the

best AI models.

OpenAI did not immediately respond to a Reuters request for

comment.