Former Malaysian Prime Minister Najib Razak at court on 19 January
Najib was jailed in 2022 over the embezzlement of Malaysia's state-owned wealth fund 1Malaysia Development Berhad (1MDB).
The board also reduced the fine imposed on him to 50m ringgit (£8.3m; $10.5m) from the original 210m ringgit.
Najib must pay this in full to secure his release in August 2028.
If he fails to pay, his sentence will be extended for another year until 2029.
He was convicted in 2020 after spending two years appealing his conviction before the courts.
The jailing of such a senior figure in Asian politics at that time caused major ripples across South East Asia. It was held up as a rare example of accountability in a region where power is so often unaccountable.
However on Tuesday, reports emerged that Malaysia's pardons board had met on the last day of the King's tenure to consider Najib's application for release. Malaysia has a rotating monarchy - King Abdullah Ahmad Shah passed the reins to Sultan Ibrahim Iskandar on Wednesday.
The reduced sentence sends a message that leaders in South East Asia act with impunity, said James Chin, professor of Asian Studies at the University of Tasmania.
"If you reach a certain level in your career, nothing can happen to you," Prof Chin told the BBC.
He said the leak of the pardons board's decision appeared to be an attempt to manage possible public outrage.
Najib's United Malays National Organisation (UMNO), which previously led the ruling coalition that governed Malaysia, has been pushing for a royal pardon after testing and exhausting other legal avenues of appeal.
Two weeks ago, Najib was escorted from prison by guards to appear in a Kuala Lumpur court to hear his latest legal challenge. Along with his wife Rosmah Mansor, he still faces a raft of other charges.
Despite the huge damage to his reputation done by the 1MDB scandal, and revelations about his role in it, Najib remains popular among grass-roots UMNO supporters, many of whom benefitted from the largesse he offered ethnic Malay communities when he was running the country. He managed to solidify that support with a slick PR campaign even after he was charged, with the slogan Bossku (Your Boss).
None of the UMNO leaders who have replaced him enjoy the same popularity, so they needed to be seen to be trying to get him out. Najib's party is not the force it was, but it is still one of the largest parties in Malaysia and a part of the governing coalition headed by his old nemesis Anwar Ibrahim. It is not so surprising then to see its wishes being accommodated.
What is the 1MDB scandal?
The 1MDB scheme was a global web of fraud and corruption, in which billions of dollars ostensibly raised for public development projects in Malaysia instead landed in private pockets, including Najib's.
Fugitive financier Jho Low, who is wanted by Malaysian authorities, is said to have been the mastermind behind the scheme. The country's anti-corruption body said last year that he is believed to be in Macau.
The case centres around the 1 Malaysia Development Berhad (1MDB), a sovereign wealth fund set up in 2009, when Najib was prime minister.
Sovereign wealth funds are government-owned investment entities that are used to boost a country's economic development. Built with state earnings, such as revenues from oil resources and exports, they have extraordinary flows of cash to invest and potentially enormous international clout.
In 2015, questions were raised around 1MBD's activities after it missed payments owed to banks and bondholders.
Malaysian and US authorities allege that $4.5bn was illicitly plundered from the fund and diverted into private pockets.
The missing money has been linked to luxury real estate, a private jet, Van Gogh and Monet artworks purchased by Low - and even a Hollywood blockbuster, the Wolf of Wall Street, starring Leonardo DiCaprio.
Last week, US bank Goldman Sachs reached a $3.9bn settlement with the Malaysian government for its role in the multi-billion-dollar corruption scheme.
The deal resolved charges in Malaysia that the bank misled investors when it helped raise $6.5bn for 1MDB.
-- Courtesy of BBC News