Former Nissan Motor Chairman Carlos Ghosn and his close aide Greg Kelly could be released on bail as soon as Friday.
The Tokyo District Court has turned down prosecutors' request for an extension of their detention beyond Thursday.
If the two men's lawyers request bail and it's approved, they could be let out of the Tokyo Detention House soon.
The two former Nissan executives have remained in custody since being arrested on November 19th. They allegedly understated Ghosn's executive compensation in Nissan's securities reports over a five-year period up to fiscal 2014.
The special investigation squad of the Tokyo District Public Prosecutors Office indicted Ghosn and Kelly on December 10th on charges of violating the Financial Instruments and Exchange Act.
On the same day, prosecutors served additional arrest warrants on the two. They say the pair also underreported Ghosn's remunerations over a three-year period up to fiscal 2017.
The two former executives have reportedly denied any wrongdoing, saying the post-retirement payment for Ghosn had not been officially decided.
It's extremely rare for a court to reject an extension request by a special investigation squad. Prosecutors are expected to file additional charges sooner than planned.
The two men's prolonged detention, including the extension with fresh arrest warrants, has drawn criticism, especially from overseas media.