A board of directors is a group composed of individuals who are accountable for the oversight, governance and direction of the organisation. They are responsible for the legal responsibilities and accountability of a company. This means that if they don’t fulfill their fiduciary obligation they may be personally held accountable.

An advisory board, on the other hand is a group of individuals who provide mentorship and advice on how a company should run. They offer more direct advice and tend to focus on strategy, growth and development, rather than reporting, risk management, governance and avoiding risks that could be detrimental to the business.

Ideally, a company should clearly define the role of its advisory board in all official documentation like meeting minutes, as well as in the way of communication to avoid confusion. This will help ensure that they do not accidentally cross into the realm of a board of directors, which can have serious legal implications for members if they’re not meeting their fiduciary obligations.

This distinction can be a bit ambiguous in real life in some instances, where organizations refer to their advisory boards as “the board.” It is important to put this in writing to ensure of clarity and to avoid mistakes that could be made. A formal written statement that defines the role of an advisory committee can aid in reducing confusion among the people involved. This is particularly helpful when board members have previously been part of an advisory board or are new to the organization.

Document Management Systems