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French rugby chief Bernard Laporte has been given a two-year suspended prison sentence and a 75,000 euro (£64,000) fine for corruption, nine months before the country hosts the World Cup.
Hours after the verdict the French Rugby Federation president stepped down as vice-chair of World Rugby.
The world governing body has referred the matter to its ethics officer.
Laporte was also banned from holding rugby posts for two years, but that is suspended pending an expected appeal.
"World Rugby notes the decision by World Rugby Vice-Chairman Bernard Laporte to self-suspend from all positions held within its governance structures with immediate effect, following his conviction by the French court in relation to domestic matters and pending his appeal," World Rugby said in a statement on Tuesday night.
"While acknowledging Laporte's self-suspension and right of appeal, given the serious nature of the verdict World Rugby's Executive Committee has referred the matter to its independent ethics officer for review in accordance with its integrity code.
"World Rugby will not be making further comment until the conclusion of the independent process."
French Sports Minister Amelie Oudea-Castera earlier said the sentence was an "obstacle for Bernard Laporte to be able, as it stands, to continue his mission in good conditions" as federation president.
Oudea-Castera called for a "new democratic era to allow French rugby to rebound as quickly as possible and sufficiently healthy and solid, with a governance by the federation that will have the full confidence of the clubs".
According to French news agency AFP, the court ruled that Laporte had showed favouritism in choosing France's shirt sponsor.
In March 2017, Laporte awarded a 1.8m euro (£1.5m) shirt sponsor contract to close friend Mohed Altrad, the billionaire owner of Top 14 champions Montpellier.
Altrad was given an 18-month suspended sentence and 50,000 euro (£42,800) fine. Both men deny any wrongdoing and Altrad's lawyer said he would study the decision before deciding on whether to appeal.
In February 2017, Laporte signed a 180,000 euro (£154,000) deal with Altrad group for his image reproduction rights and prosecutors claim Laporte did not deliver the services paid for.
Altrad's logo still features on France's shirts, with Laporte, 58, negotiating a follow-up deal in 2018.
Laporte, who coached France to the 2003 and 2007 World Cup semi-finals, was also found guilty of intervening with disciplinary action against Altrad's club Montpellier. He was convicted of helping to reduce a fine against the club from 70,000 euros (£60,000) to 20,000 euros (£17,000).
In November, financial prosecutors searched the headquarters of France's 2023 Rugby World Cup organisers as part of a government inquiry into the management of the organising committee.
BBC rugby union correspondent Chris Jones
Laporte is one of the most powerful men in world rugby and was set to be a prominent figure at next year's World Cup in France, but this verdict throws his future involvement in the sport into serious doubt.
Even though Laporte is expected to appeal, his position at World Rugby is untenable with the governing body referring the matter to their independent ethics officer, who was appointed earlier this year after a governance review in 2021.
Laporte's charges are not connected to World Rugby or Rugby World Cup activities, but it is nonetheless an unwanted episode for the governing body given his influence both in France and on the global stage.
