A flood of company directors is expected to disclose that they have secretly mortgaged their shares in the coming weeks as two directors of Leeds Group, the fabric importer, today became the latest to admit to the practice.

The David Ross affair has triggered a rethink among corporate brokers with many now advising their AIM-listed clients to ensure directors disclose where their stakes are pledged as security for borrowings.

Leeds Group said its non-executive directors, Peter Gyllenhammer and Johan Claesson, had used 6.7 million shares and 8 million shares respectively as security for credit facilities with their banks. The stakes represent 22 per cent and 27 per cent of the business.

It said it had received notice of the arrangement from the two men on 18 December. Both arrangements were put in place before the men joined the Leeds board, it added.

On Tuesday Michael Spencer, a director of the stockbroker Numis and Conservative Party Treasurer, admitted he had pledged £15 million of Numis shares as security for a bank loan without disclosing the fact.

A re-examination of the rules on disclosure of shares pledged as security has been triggered by the saga of David Ross, co-founder of Carphone Warehouse. Mr Ross, it emerged this month, had used shares in four public companies where he was a director, to secure loans of more than £100 million. He has since left the boards of three of them.

The rules are particularly opaque for companies on AIM, the junior share market. Nomads - nominated advisers advising AIM companies - have written to their clients in the wake of the Ross affair urging their directors to consider whether they might need to make a disclosure.

"We've written to all our clients and we're expecting a flood of disclosures in the New Year," one nomad told The Times today.

Using shares as collateral can be seen as a change of ownership and could put downward pressure on a company's share price if the director defaults and the bank then has to sell the shares.

Leeds Group separately revealed that it had inadvertently failed to disclose that its chairman Ewen Wigley had been a director of a failed company in the past. Mr Wigley became a director of Pressac in August 2005 shortly before it was declared insolvent.

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