Proud was notified of the decision at a meeting with Club officials today.
The 22 year-old was charged with assaulting a police officer on Saturday night and will be required to appear in the Brisbane Magistrates Court on February 8.
The Club will also conduct a full investigation into the incident.
Further penalties may apply as a result of outcomes from that investigation.
The Club had provided Proud with a rookie list opportunity for this season after he had been delisted in October 2010.
Rookie list players are contracted to the Club but are only eligible to play in the AFL competition if promoted to the senior list.
The Brisbane Lions will only offer further comment on this matter once the Club's investigation has concluded.
