Nissan is preparing to oust its chairman, Carlos Ghosn, after discovering "significant acts of misconduct" over many years by him and another top executive.
The stunning announcement about one of the global auto industry's highest-profile leaders slammed the stocks of Nissan (NSANY) and Renault (RNSDF), two of the carmakers that Ghosn leads.
Nissan said in a statement that it had been investigating Ghosn and another board member for months, and was now cooperating with Japanese prosecutors. Japanese media reported that Ghosn was being questioned by prosecutors and could be arrested.
The company said its investigation found that Ghosn, 64, and the other board member, Greg Kelly, had been under-reporting Ghosn's compensation. "Numerous other significant acts of misconduct have been uncovered, such as personal use of company assets," it added.
As a result, CEO Hiroto Saikawa will propose to Nissan's board of directors to "promptly remove Ghosn from his positions as chairman and representative director," the company said. He will also try to have Kelly removed from the board.
Renault and Nissan shares plunge
Shares in Renault, where Ghosn is CEO, plunged as much as 13% in Paris. Renault didn't immediately respond for a request for comment.
Nissan's announcement came after the close of trading in its stock in Tokyo. But its shares plummeted 10% on the Frankfurt stock exchange.
"Nissan deeply apologizes for causing great concern to our shareholders and stakeholders," the company's statement said. "We will continue our work to identify our governance and compliance issues, and to take appropriate measures."
Ghosn is also chairman of Japan's Mitsubishi Motors (MMTOF). CNN wasn't immediately able to reach Mitsubishi for comment outside of regular business hours.
Under Ghosn, the three carmakers formed an alliance that rivals Volkswagen (VKLAF) and Toyota (TM) in terms of vehicle sales. The alliance sold 10.6 million vehicles last year, more than one in nine of worldwide auto sales.
Together, Renault, Nissan and Mitsubishi employ more than 470,000 people in nearly 200 countries, according to the alliance's website.
Nissan's revelations came after Japan's Asahi Shimbun newspaper and broadcaster NHK reported that prosecutors were questioning Ghosn on suspicion of under-reporting his salary and may arrest him.
The prosecutors' office didn't respond to a request for comment outside regular office hours.