A board of directors is a group composed of people who are responsible for the oversight, governance and direction of the organization. They oversee the legal responsibilities of a business and are held to a high level of accountability. If they fail in their obligations to their fiduciary obligations, they may be personally held accountable.
An advisory board however, is a group of people who offer guidance and mentorship on how a company should be run. They offer more direct guidance and tend to concentrate on growth, strategy and development instead of reporting and reporting, risk management, governance and avoiding downside risks.
Idealy, an organization should clearly define the role of its advisory board in all continue reading this official documents such as meeting minutes and the way of communication to avoid confusion. This will ensure that they don’t accidentally get into the realm of a board of directors and could result in serious legal implications if they fail to meet their fiduciary duty.
The distinction between advisory boards and board members can be somewhat blurred in the real world as some companies refer to their advisory boards as “the board.” It’s a good idea to put this in writing in the interest of clarity and to avoid unintentional mistakes. A formal written declaration defining the function of an advisory committee helps to avoid confusion for the people involved. It is particularly useful when members of the advisory committee may be a part of an executive board or are new to the organization.