Board of Directors Vs Advisory Board
Board of Directors Vs Advisory Board

A board of directors is a group of individuals who are responsible for the supervision, governance, and control of an organisation. They oversee the legal responsibilities of a business and are held to a high level of accountability. This means that if they fail comply with their fiduciary obligations and are found to be in breach, they could be personally liable.

A group of people who advise and mentor a company is an advisory board. The advice they provide is more direct, and their focus tends to be on development, growth and strategy, not reporting governance, governance, risk management and avoiding risk of downside.

Ideally, a company should set out clear guidelines for the work of their advisory board not just in official documents like meeting minutes but also in all communication with the board to avoid confusion. This will help ensure that they don't accidentally stray into the territory of being a board of directors, which can have serious legal implications for members if they're not meeting their fiduciary obligations.

In practice, the distinction can be blurred, and organizations may refer to their advisory board as "the Board." It is recommended having it written down to avoid any confusion or accidental mistakes. A formal written declaration defining the purpose of an advisory board helps to https://theirboard.com/whats-the-difference-between-the-board-of-directors-and-an-advisory-board/ minimise the risk of confusion for those involved. It is particularly useful for those whose members of the advisory committee may have been previously part of an executive board or have just joined an organization for the first time.

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