Elon Musk has reached a settlement with the Securities and Exchange Commission (SEC) that will permit him to remain the Chief Executive Officer (CEO) of Tesla Inc but requires him to relinquish the role of the company's chairman, The Wall Street Journal has reported.

Musk will have to resign within 45 days and can’t be re-elected to the role for three years, the deal reached with SEC says.

Musk and Tesla also reached an agreement with SEC to pay a hefty fine of $20 million. The company has agreed to appoint two new independent board members, set up a new committee of directors and create controls to oversee Musk’s communications. Musk, however, will remain on the Tesla board.

The settlement announcement by the SEC comes as a surprise given reports that the regulator decided to press charges against Musk after he had rejected an offer of settlement and was bracing himself for a confrontation with the agency.

Alleging that Musk misled shareholders by tweeting that he had secured funding to take Tesla private, SEC filed a lawsuit seeking an order barring Musk from serving as an officer or director of any publicly traded US corporation.

In its complaint, the SEC said Musk knew he "had not agreed upon any terms for a going-private transaction with the Fund or any other funding source," and also charged that Musk "had no further substantive communications with representatives of the Fund beyond their 30 to 45-minute meeting on 31 July."

Musk had tweeted out on 7 August that he was considering taking his electric vehicle maker private at $420 a share.

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