Although still referred to as the famous British team's 'supremo', the 65-year-old - succeeded by Martin Whitmarsh - stepped down as McLaren team principal some years ago.
He also sold half of his 30 per cent stake in the Woking based company to the Bahrain investment vehicle Mumtalakat Holding, and most recently has been focused on McLaren's road car production subsidiary.
And according to Auto Motor und Sport, it is the road car business, and the extent of Bahrain's new influence at McLaren, that has resulted in Dennis' latest demotion.
The German magazine reports that Dennis has lost his voting rights on the McLaren Group board, leaving him only a non-executive member due to his status as co-owner.
Auto Motor und Sport said Bahrain is angry because Dennis' pet project, McLaren Automotive, is losing rather than making money.
"Instead of the planned 3,500 units, only half of that are sold," wrote correspondents Michael Schmidt and Bianca Leppert.
"The Bahrainis are seeing their money disappear, never to return," they added, estimating Bahrain's losses in the hundreds of millions.