French Rugby Federation president Bernard Laporte must leave office after receiving a two-year suspended prison sentence for corruption, sports minister Amelie Oudea-Castera said.
The Paris Criminal Court announced the punishment on Tuesday, after investigating a number of marketing decisions made by Laporte that favoured Mohed Altrad, the president of Top 14 club Montpellier, including a shirt sponsorship deal for his construction business with the France national team.
Laporte was also handed a €75,000 fine and a two-year ban from involvement in rugby by the court, raising the possibility of him being out of office before France hosts next year's Rugby World Cup. Altrad was given an 18-month suspended sentence and a €50,000 fine.
The court heard Laporte had taken his actions while also agreeing a personal image rights deal with Altrad that was worth €180,000 to the former France coach, according to Le Parisien and other French media.
Laporte's lawyers announced there will be an appeal against the punishments. Prosecutors had been seeking jail time for both he and Altrad.
The French federation (FFR) said Laporte would stay as president pending the outcome of his appeal. Laporte is also a vice-chairman of World Rugby, which said its executive committee would meet later on Tuesday to consider the outcome.
Laporte and Altrad had denied wrongdoing, and Oudea-Castera said the planned appeal from Laporte should be allowed to run its course.
But her office said in a statement: "In terms of good governance, the minister considers that this new context prevents Bernard Laporte from being able, as it stands, to continue his mission in good conditions at the head of a delegated federation of a public service mission, at a moment as decisive for French rugby as the home stretch before a Rugby World Cup where France will receive nations from all over the world.
"The minister therefore calls for a new democratic era allowing French rugby as quickly as possible to restart on sufficiently healthy and solid bases, with a governance of the federation which will have the full confidence of the clubs and will be able to bring people together.
"It is therefore up to the authorities of the federation that it is now up to them to take up their responsibilities."
Montpellier issued a statement that read: "The Paris Criminal Court delivered a decision at the start of the afternoon which, on the merits, is not fully satisfactory, although the sentences are very different and well below the requisitions requested, which testifies to the insufficiency of the elements of this file."
It said Altrad's lawyers would consider whether to appeal, adding: "It is essential to emphasise that Montpellier Herault Rugby is neither targeted nor impacted by this decision and that Mohed Altrad will continue to invest his time and energy in his management missions for his club, its employees and its partners."