Nissan Chairman Carlos Ghosn has been voted out of the company by the board after nearly two decades at the helm.
He has been accused by Nissan of under-reporting his salary and using company assets for personal use.
Nissan's board issued a statement which said the decision to dismiss Mr Ghosn and senior executive Greg Kelly was unanimous.
Nissan also accused Mr Kelly of having been "deeply involved" in the misconduct.
Mr Ghosn is accused of filing annual securities reports containing fake statements, which could mean up to 10 years in prison, or a fine of 10m yen, or both.
However, some believe that this is a ‘hatchet job’ by executives within the company, in an attempt to rebalance power in its alliance with Renault and Mitsubishi. Mr Ghosn was responsible for the alliance between the three firms.
While Nissan boss Haroto Saikawa insisted the partnership would "not be affected" by the arrest of Mr Ghosn and Mr Kelly, Mitsubishi Motors chief executive Osamu Masuko admitted that the alliance between the three carmakers would be difficult to manage without Mr Ghosn.
