Elon Musk must step down as Tesla chair and pay a fine after reaching a deal with US regulators over tweets he posted about taking the firm private.
This comes after a decision by the Securities and Exchange Commission (SEC) Thursday to sue Mr Musk for alleged securities fraud.
Under the deal, Mr Musk will remain as Tesla CEO but has to step down as chairman for three years, while both he and the company will also have to pay a $20m (£15m) fine.
The fraud allegation relates to his August tweet in which Mr Musk said he was considering taking electronic car maker Tesla off the stock market and into private ownership due to shareholders interference.
He wrote he had “funding secured” for the proposal, which would value Tesla at $420 per share. Shares in the company briefly rose after his announcement, but later fell again.
The SEC said those claims were “false and misleading”, adding that he had not “even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”
Musk now has 45 days to leave his role as chairman of Tesla while a new “independent chairman” for the company will be appointed, who will preside over the company’s board.
Forcing Tesla to separate the roles of CEO and chairman should limit Mr Musk’s power within the company, even if he remains in charge of day-to-day operations as CEO.
Born in South Africa, Mr Musk is ranked the 25th richest person in the world, according to Forbes, which estimates his net worth to be $19.7bn.