Nissan's high-flying chairman Carlos Ghosn is to be dismissed after the Japanese car giant said an internal investigation found he under-reported his income and engaged in other "significant misconduct".
The Japanese broadcaster NHK said Mr Ghosn was arrested on Monday after he voluntarily submitted to questioning by Tokyo prosecutors.
The Yokohama-based company, one of the world's largest carmakers, said the violations were discovered during an investigation over several months that was instigated by a whistleblower.
Mr Ghosn, 64, also allegedly engaged in personal use of company assets, it said.
Nissan said it was providing information to the prosecutors and cooperating with their investigation.
The allegations also concern a Nissan representative director, Greg Kelly, it said.
Nissan's chief executive Hiroto Saikawa planned to propose to its board that Mr Ghosn and Mr Kelly both be removed from their posts, the company said in a statement.
"Nissan deeply apologises for causing great concern to our shareholders and stakeholders.
"We will continue our work to identify our governance and compliance issues, and to take appropriate measures," it said.
The Nissan-Renault-Mitsubishi group is among the biggest auto alliances in the world, selling about 10 million vehicles a year.
Before joining Renault, Mr Ghosn worked for Michelin North America.
Shares in Renault SA of France plunged 14% early on Monday.
The news of Mr Ghosn's troubles broke after Japanese markets had closed for the day.
The allegations are a serious blow at a time when Nissan and Mitsubishi Motor Co are still overcoming scandals over their quality testing reporting.
Mr Ghosn is credited with helping engineer a remarkable turnaround at Nissan over the past two decades, resuscitating the Japanese automaker from near bankruptcy after he was sent in by Renault.
He served as Nissan's chief executive from 2001 until April 2017, becoming chief executive of Renault in 2005, leading the two major carmakers simultaneously.
In 2016, Mr Ghosn became Mitsubishi Motors' chairman.
For the past two decades, he has maintained an unusually high profile in a nation where foreign chief executives of major Japanese companies are still relatively rare.
Mr Ghosn has appeared on magazine covers dressed in a kimono, vowing to renew the Nissan brand.
He was widely praised in Japanese industry circles for delivering sorely needed cost cuts and introducing greater efficiency at a time when Nissan needed a fresh start.