A Tokyo court today unexpectedly decided not to extend the detention of Nissan's sacked chairman, Carlos Ghosn.
This means he may soon be released from jail where he has been confined since his arrest for alleged financial misconduct.
The Tokyo District Court said it also decided against extending detention for Greg Kelly, a former Nissan executive who was first arrested along with Ghosn on November 19.
It was unclear whether prosecutors will appeal the decision.
Shin Kukimoto, deputy prosecutor at the Tokyo District PublicProsecutors Office, said only that his office will respond "appropriately".
Carlos Ghosn has been indicted for allegedly understating his income over a five-year period from 2010.
He was re-arrested on December 10 for the same alleged crime covering the past three years. The 10-day detention period in the second instance ran out today.
The court had widely been expected to extend the detention, as granting bail to suspects who insist on their innocence is highly unusual in Japan.
Japanese public broadcaster NHK said Ghosn could be released today or tomorrow if any appeal by prosecutors is rejected by the court and bail is granted.
Ghosn's arrest marked a dramatic fall for a leader once hailed for rescuing Nissan from the brink of bankruptcy.
It was not immediately clear how much bail would be, meaning it was still uncertain whether Ghosn's release was possible.
Ghosn's Nissan income is at the centre of allegations by Tokyo prosecutors, who have charged the executive for failing to disclose compensation that he had arranged to receive later.
Nissan has said its whistleblower investigation also uncovered personal use of company funds and other misconduct.
The scandal has shaken the Renault-Nissan-Mitsubishi alliance, with Nissan chief executive Hiroto Saikawa calling for changes to weaken Renault's control.
Renault has so far not replaced Ghosn as head of the French carmaker, saying Ghosn's compensation had been in compliance with law and governance guidelines.
Documents seen by Reuters showed that executives at both Nissan and Renault were involved in discussions about compensating Ghosn out of the public eye.
A Nissan spokesman declined to comment on the court's decision, saying he could only speak about the company's investigations or executive misconduct.