Leeds owner Massimo Cellino could be forced to sell the club after the Football League announced the Italian has failed its Owners' and Directors' Test.
Cellino successfully appealed against the League's decision to block his takeover of Leeds in April, but after receiving the detailed evidence from the Italian court that convicted him of tax evasion, the governing body has ruled the 58-year-old is not fit to continue as the club's president.
The League's board of directors agreed unanimously at a meeting last week, after finally receiving the Italian judge's written report on Cellino's conviction for failing to pay tax on his yacht, that Cellino is "subject to a disqualifying condition under the terms of the Test".
The League confirmed that Cellino is entitled to appeal.
The League has said that Cellino must resign from his position immediately, and has 14 days in which to lodge any appeal.
Should the decision to disqualify Cellino be upheld, the sanction applies until March 18 of next year when under UK law the conviction is deemed to be spent.
The League has also asked an independent disciplinary commission to consider whether Cellino and/or Leeds breached League regulations by not disclosing relevant information in a timely manner.
The Football League said in a statement: "At its meeting last week, the board considered the reasoned judgment of the Italian court against Mr Cellino, having successfully applied to the Italian courts for its full disclosure.
"The board considered detailed legal advice and agreed unanimously....that Mr Cellino is subject to a disqualifying condition under the terms of the (Owners' and Directors') Test.
"As the judgment of the Italian court has not been published in Italy, the Football League will not make any of its contents public."