A board of directors is an organisation comprised of individuals who are responsible for the management, control and direction of the organisation. They are https://theirboard.com/corporate-decision-making-reimagined-with-virtual-board-rooms/ responsible for the legal obligations and accountability of the company. This means that if they fail meet their fiduciary duty, they can be personally liable.
A group of people who advise and coach a company is an advisory board. The advice they offer is more direct, and their focus tends to be on growth, development and strategy, not reporting, governance, risk management and avoiding downside risk.
Ideally, an organization should outline clear guidelines for the work of their advisory boards – not only in official documentation like meeting minutes, but also in all communication with the board to avoid confusion. This will ensure that they don’t stray into the realm of a board of directors, which could have serious legal consequences for members if they are not meeting their fiduciary duties.
The distinction between advisory boards and board members can be a bit blurred in practice and some organizations refer to their advisory boards as «the board.» It’s worth putting this in writing, both for the sake of clarity and to avoid accidental missteps. A formal written declaration that outlines the purpose of an advisory board will aid in reducing confusion among the people involved. This is especially helpful when members of the board have previously been part of the board or are new to the company.
