The Provincial Unions have overwhelmingly rejected New Zealand Rugby's proposed governance reforms at Thursday's pivotal special general meeting in Wellington.
Proposal One has been comprehensively defeated by a vote of 31-59, failing to reach the two-thirds majority it needed to pass.
Proposal Two has been passed by 69-21, meaning the provinces have gathered enough support for it to be accepted.
Backed by NZR, the NZ Rugby Players Association, and the Super Rugby franchises, Proposal One involved adopting most of the recommendations of last year's independent review known as The Pilkington Report, which found that the current constitution of the board is not "fit for purpose in the modern era". It meant reducing the influence of the provincial unions on NZR governance.
Proposal Two is put forward by the provincial unions - including Auckland, Wellington, Canterbury, Hawke's Bay, Bay of Plenty and North Harbour - to make the board independent, but with at least three members with previous provincial union experience
Other provinces, including Otago, Taranaki, and Manawatu, voted for Proposal One.
NZR acknowledges the outcome and says it remains committed to "engaging constructively with all rugby stakeholders to implement reform and provide certainty to the game."
Last year's independent review recommended that all nine members of the NZR board be independently appointed.
Currently the 26 provincial unions and the Māori Rugby Board nominate three of the board members.
Last week, NZ Rugby Players Association said it would break away from NZR if Proposal One were not voted in.
After the vote, NZRPA boss Rob Nichol lamented the failure of Proposal One as a missed opportunity.
"The expert panel laid out what we needed to do perfectly in their recommendations," said Nichol.
"Those recommendations got support from NZR, NZRC, Maori Rugby Board, Super Clubs, NZRPA and a good group of PUs.
"It was a great opportunity for the game to make the changes required.
"It's unfortunate a majority of the PUs haven’t taken that opportunity, and instead the game has ended up with what the experts referred to as status quo or worse."
