Ports Design plunges after chairman quits Ports Design, the Chinese fashion retailer, suffered a 38 per cent share price fall in Hong Kong on Tuesday after its chairman resigned over the failure to disclose related party transactions. The company, which operates 389 high-end clothing stores across China, is one of dozens of Chinese companies that have been embroiled in corporate governance scandals over the past year. In a statement to the Hong Kong stock exchange late on Monday, Ports said its founding chairman Edward Tan "accepted full responsibility for failing to exercise proper procedures and controls resulting in breaches of the listing rules." Over the past two years, Ports loaned hundreds of millions of renminbi to related parties, including three interest-free advances to Mr Tan, which should have been disclosed to shareholders, the company said. These loans have been repaid, Ports said. In 2010, for example, Ports loaned Rmb4m ($633,000) to Mr Tan "to set up a charitable fund for the needy in China who require financial assistance due to sickness or for their children's education." The following year, Ports loaned about Rmb30m to Mr Tan to help him set up an internet shopping website. Mr Tan and his brother Alfred Chan founded Ports in 1993, having acquired a bankrupt Canadian fashion label that was originally established in Toronto in the 1960s. The two brothers are controlling shareholders of Ports, together owning a 41 per cent stake. While Mr Tan has stepped down as chairman, Mr Chan remains chief executive. Other shareholders include GIC, Singapore's sovereign wealth fund, and Fidelity China Special Situations, the London-listed equity fund managed by Anthony Bolton. In March, shares in Ports were suspended from trading when the company failed to file its annual accounts on time. On Monday, Ports released audited results for the year ended December 2011, reporting that net profit declined to Rmb430m from Rmb471m in 2010. The company, audited by KPMG, said it had restated its accounts for 2010 to take into account the related party transactions. Sarah Xing, an equity analyst at Nomura, advised that investors should treat the stock with caution. "It's really hard for us to justify how much discount we should apply to the company because of the corporate governance issue," she said. By early afternoon on Tuesday, Ports" shares were trading at HK6.89, down 38 per cent from before they were suspended.