MORE than 39,000 owners of small or medium-sized businesses in the south have been sued or threatened with legal action because of management decisions.

But research by Zurich's UK commercial business department has found that more than one in 10 small business owners and directors don't know they can be held personally liable for the actions they take in day-to-day business.

Shareholders, employees, suppliers, customers, creditors and regulatory authorities can sue for wrongful acts, and until a director can establish innocence they have to fund any legal defence costs, and pay any damages themselves.

On average, a director may face bills between £25,000 and £50,000.

Zurich's speciality lines manager Jim Gaskin said: "We are urging directors of small and medium-sized companies to talk to their brokers and make sure they have insurance in place to protect them.

"Actions of directors are under scrutiny as never before."

and small businesses are particularly vulnerable as they may not be in a position to pay for the cost of their defence."