A board of directors is a group of people who are accountable for management, control and direction of an organisation. They this post are responsible for the legal obligations and accountability of a business. If they fail in their obligations to their fiduciary obligations and obligations, they could be personally accountable.
A group of individuals who mentor and advise a company is an advisory board. The advice they provide is more hands-on, and their focus is on growth, development and strategy, instead of reporting, governance, risk management and avoiding risk that could be detrimental to the business.
Ideally, an organisation should set out clear guidelines for the work of their advisory boards – not just in official documents such as meeting minutes, but as well in every day communication to avoid confusion. This will ensure that they do not accidentally enter into the territory of a board of director which could result in grave legal consequences in the event that they fail to fulfill their fiduciary duty.
The distinction between advisory boards and board members can be a bit ambiguous in real life, with organisations sometimes referring to their advisory boards as “the board.” It is important to put this in writing to ensure of clarity and to avoid any unintentional mistakes. A formal written declaration defining the purpose of an advisory board can help to reduce the chance of confusion for those involved. This is especially useful when members of the advisory board might be members of the board of directors or are new to the organization.
