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Reading have been given until April 22 for owner Dai Yongge to divest his interest in the club or risk being disqualified from the EFL.
Having already been disqualified as a director of the club, EFL rules state that the controversial Chinese businessman would have 28 days to sell his shares at which point Reading could be suspended from the league.
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The extension is to allow the Royals to progress with a potential sale that would save the club's future.
A statement from the EFL said: "Following a meeting of the EFL’s Board earlier today, the League can confirm that following a request from Reading FC it has extended the time allowed for Mr Dai Yongge to divest his interests in the Club until 22 April subject to compliance with all other EFL Regulations.
"As stated previously, the League’s priority is to progress a sale of the Club at the earliest opportunity, in order to end the current uncertainty surrounding its future for its staff, supporters and wider community. While Mr Yongge is yet to divest his interests, as is required following his disqualification, discussions for him to do so remain active and ongoing.
"The Board recognised that these matters are further complicated by the structure of assets held across different companies, and various competing security interests, and therefore deemed it appropriate to allow more time for them to be resolved. In the meantime, the League will continue to monitor those discussions and the Club's immediate cash flow requirements.
"The League has the power to suspend a Club if a Director fails to comply with the requirements of their disqualification. The terms of any suspension would be at the discretion of the Board, and while suspended Clubs are not permitted to fulfil League matches, they would continue to be a member of the League at that point.
"Following recent comments in respect of the circumstances around the approval of Mr Yongge’s acquisition of the Club in 2017, the League would like to reiterate that Mr Yongge was not subject to a sports governing body disqualification, including the Premier League, at the time of the acquisition.
"The reason Mr Yongge did not procced with a purchase at Hull City was related to the involvement of a separate individual. This individual was not involved in the subsequent purchase of Reading, and in the absence of any disqualifying condition, alongside ample evidence of source and sufficiency of funding, the EFL was obligated to confirm that Mr Yongge met the requirements of the Regulations."
The bombshell came to light during a hearing at London Commercial Court into a dispute between Yongge and Rob Couhig over the potential purchase of the Royals last year.
The EFL have since confirmed Yongge has been disqualified and would 'consider all options' in their bid to reach a resolution for all parties.
"Following its disclosure in open court earlier today, the League can confirm that Mr Yongge has been recently disqualified under the EFL’s Owners’ and Directors’ Test," the statement read.
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"The disqualification requires Mr Yongge to divest his interests in the Club, and in the event that he fails to do so within the agreed timeframe, the League will consider all options available within its regulations to bring the matter to a conclusion.
"The League continues to work closely with Reading FC to progress a sale of the Club at the earliest opportunity, in order to end the current uncertainty surrounding its future for its staff, supporters and wider community."
Yongge previously agreed to a £30million deal to sell the Royals to Couhig, an American lawyer, but the deal ultimately collapsed.
Reading also entered a period of exclusivity with an interested party ahead of a mooted takeover in February.
However, that failed to materialise after the period of exclusivity expired.
This came after failed bids from former Wycombe Wanderers owner Rob Couhig and ex-Royals chairman Roger Smee in 2024.
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Yongge purchased an initial 75 per cent share in Reading in 2017 before he took full ownership.
However, Yongge's ownership in recent years has been dogged by off-field difficulties.
The Royals have been hit with several points deductions and transfer embargoes due to falling foul of the EFL's Financial Fair Play rules as well as unpaid taxes.
As a result of the constant points deductions, Reading were relegated from the Championship at the end of the 2022/23 season.
Reading were also docked a total of six points last term in League One as they recorded a 17th-place finish.
Royals supporters have made no secret of their frustration with Yongge, with fan-led pressure group Sell Before We Dai the most vocal amongst the supporter base.
Simon Jordan clashes with Reading fan Paul Mann over their recent protest on the pitch at the Madejski Stadium
In January 2024, the fans' frustration spilled onto the pitch during Reading's match against Port Vale.
A protest was initially planned for the end of the match, but fans could no longer hide their frustrations from the start.
Chants of 'Get out of our club' and 'we want Dai Yongge out' were followed by hundreds of tennis balls being thrown onto the pitch at Reading's home ground.
Reading released a message on social media where they reminded fans 'that entering or throwing items onto the pitch can pit the fixture at risk of abandonment'.
Despite the threats from the club, it didn't stop frustrated fans from storming onto the pitch with banners and flares after 16 minutes
The on-field protest ultimately led to the clash being abandoned.
Reading sit eighth in League One on 59 points, two off sixth-placed Huddersfield Town who occupy the last play-off spot.
