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David Ross, who co-founded Carphone Warehouse with Charles Dunstone, has resigned as deputy chairman after failing to declare he used his 15 per cent stake in the mobile phone business to secure personal loans.

Shares in Carphone Warehouse fell 5.4 per cent to 88p this morning, a five-year low, on fears that Mr Ross will now have to sell the shares. However, Carphone Warehouse said this morning Mr Ross has no plans sell his stock.

Mr Ross is Carphone's second-largest shareholder with 19.4 per cent of its shares and in May this year was appointed by Boris Johnson, the Mayor of London, to oversee the running of the 2012 Olympics.

The prices of a host of companies in which Mr Ross has large shareholdings and directorships plunged in early trading.

Mr Ross has also guaranteed 11m of its shares in Big Yellow Group, the storage company in which he is the biggest single shareholder, against his personal loans. The company declined to comment on whether he would be forced to resign as a director over the mistake.

Cosalt, the safety services company of which Mr Ross is also chairman, said that he had pledged 3,989,296 of its shares against personal borrowings on various dates on or after March 23, 2006. On that date, its share price was £2.74 but has since almost halved.

National Express, the rail company chaired by Mr Ross, would not tell The Times whether he would continue as chairman.

When Mr Ross used some of his shares as security for personal loans in 2002 and 2003, he went through the proper procedure, which states that if a director uses his shares in this way, the company has to make an official announcement.

At the time of his Olympic appointment, Mr Johnson said: “I promised Londoners I would ensure that the investment we are making in the 2012 Games offers the best value for money.

“David is one of Britain's leading entrepreneurs and brings years of business experience to the role. Having co-founded one of our most well-known household names and turned it into a huge success, his skills will be vital in helping to deliver the legacy on which the success of the London Games will be judged.”

The loans that caused his resignation were taken out between 2006, when Carphone's share price hovered around £3, and 2008, when it plunged to below £1.

This morning, Mr Dunstone, chief executive of Carphone Warehouse, said Mr Ross's resignation was a "great personal sadness" and the incident was "probably an oversight or a misunderstanding of what needed to be done".

Carphone Warehouse said today: "On 7 December 2008, the company received notification from David Ross, a director of the company, that he had, through various agreements between 2006 and 2008 and as part of a package of security comprising other assets of substantial value, pledged 136.4 million ordinary shares in the company against personal loans."

The company said that none of the loans Mr Ross borrowed using his Carphone Warehouse shares was in default "and that he has no current intention to sell any of his shares in the company".

It added: "In addition, he has given an undertaking to the board to facilitate an orderly market, where possible, for any potential future disposal of shares in the company."

The 87th richest man in the UK, according to this year’s Sunday Times Rich List, Mr Ross has a worth of £873 million. He has resigned as a director of the company he set up with Mr Dunstone, a school friend, with immediate effect and will continue to pursue his other business interests.

During his time at Carphone Warehouse, he appeared content to let Mr Dunstone take much of the spotlight and rarely gave interviews. He served as its chief operating officer between 1990 and 2003.

Earlier this year, he sold £32.6 million worth of shares, reducing his stake in the business from 22 per cent to 20 per cent, weeks after the company announced a major tie-up with US retailer Best Buy. No other shareholder or fund, apart from Mr Dunstone, has more than 4 per cent.

Mr Ross, 42, a chartered accountant who once served on the board of Wembley Stadium, owns an 11,000-acre North Yorkshire grouse moor.

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