A board of directors is a group of people who are accountable for management, control and direction of an organization. They are accountable for the legal obligations and accountability of a business. This means that if they fail to perform their fiduciary duties www.theirboard.com/what-it-takes-to-be-an-effective-board-member/ they could be personally liable.
An advisory board is, in contrast, is a group of individuals who offer guidance and mentorship on how a company should be run. They provide more hands-on advice and tend to focus on growth, strategy and development instead of reporting or reporting on risk management, governance and avoiding risks that could be detrimental to the business.
Ideally, an organization should set out clear guidelines for the work of their advisory board – not only in official documentation like meeting minutes but as well in every day communication to avoid confusion. This will ensure that they don’t accidentally cross over into the territory of a director’s board and have grave legal implications if they fail to meet their fiduciary obligation.
This distinction can be somewhat unclear in practice as some companies refer to their advisory boards as «the board.» It’s a good idea to put this in writing, both for the sake of clarity and to avoid accidental missteps. A formal statement that defines the role of an advisory board will reduce confusion among the people involved. This is especially useful when board members were previously part of the board or have just joined to the company.
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