Ospreys chairman Mike James has resigned amid reports that the club are set to merge with fellow Welsh rugby side Scarlets.
James announced his decision at the start of a meeting of the Professional Rugby Board (PRB) on Tuesday, which is set to determine whether the merger will take place.
In a statement, James cited the "catastrophic mismanagement" of the Welsh Rugby Union's plans to overhaul the domestic game.
"None of us doubt that regional rugby requires restructuring in order to ensure the long-term sustainability of the game," James said.
"The way in which this has been handled however is nothing short of chaotic, resulting in a fatal combination of uncertainty, conjecture and insecurity now hanging over regional rugby's future.
"To methodically, rationally and impartially map out the future of regional rugby is one thing, to fatally wound it with an ill-judged, cavalier process is another. We now have the worst of all worlds -- a lack of clarity, a lack of transparency and a total inability to plan ahead.
"We can no longer make sound rugby or business decisions and nor can our players or commercial partners. Project Reset has become Project Inept."
The merger represents the most radical change to regional rugby in Wales since its inception in 2003, with the WRU keen to introduce a professional side in north Wales to keep the number of professional teams in the country at four.
Ospreys and Scarlets are two of Wales' most successful sides, and both teams consist of a large number of Welsh internationals.
Details on the name of the team, where it would play and who would coach the regional side are yet to be finalised and will likely form part of the discussions at Tuesday's meeting.
Wales international Ken Owens, who is also chairman of the Welsh Rugby Players Association, added that he was "deeply concerned" by the proposed move in a statement released by the organisation earlier on Tuesday.
"I recognise that this is the most challenging situation that I or arguably any player has faced during our rugby careers," Owens said. "I appeal to all stakeholders to have the concerns and welfare needs of all those that stand to be affected by the proposed changes at the forefront of their minds.
"It's also clear players need to be represented on the PRB because they can and must be part of the solution. Without them there is no Welsh Rugby."
Information from Reuters contributed to this report