A board of directors is an organisation of individuals who are responsible for the oversight, governance and direction of the organization. They are accountable for the legal obligations of a business and are held to a strict standard of accountability. If they fail in their obligations to their fiduciary duties and obligations, they could be personally accountable.
An advisory board, on the other hand, is a group of people who offer guidance and mentorship on how a business should run. The advice they give is more practical, and their focus is on development, growth and strategy, rather than reporting and governance, managing risk and avoiding downside risk.
Ideally, an organisation should outline clear guidelines for the work of their advisory committee – not only in official documentation read post https://theirboard.com/ like meeting minutes but also in all communication with the board to avoid confusion. This will ensure that they do not accidentally enter into the territory of a board of directors and could result in serious legal implications if they fail to meet their fiduciary obligations.
This distinction is a bit blurred in practice 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 any mistaken assumptions. A formal written statement defining the function of an advisory committee helps to reduce the chance of confusion for the people involved. It is particularly useful for those whose members of the advisory board may be members of a board of directors, or are new to the company.