A board of directors is a group of people who are accountable for governance, control and direction of an organization. They are accountable for the legal obligations of a business and are held to a strict level of accountability. This means that if they fail fulfill their fiduciary obligation, they can be personally held accountable.
A group of individuals who mentor and advise companies is known as an advisory board. They provide more direct and practical guidance and tend to concentrate on growth, strategy and development rather than reporting and reporting, risk management, governance and avoiding downside risks.
Ideally, a company should clearly define the purpose of its advisory board in all official documentation such as meeting minutes and the way of communication to avoid confusion. This will ensure that they don’t accidentally cross over into the territory of a board of directors, which could have serious legal consequences in the event they fail to perform their fiduciary obligation.
In reality, this distinction may be blurred and some organizations refer to their advisory board as “the Board.” It is recommended putting it https://theirboard.com/whats-the-difference-between-the-board-of-directors-and-an-advisory-board/ in writing to avoid confusion or accidental mistakes. A formal statement of the nature of the role of an advisory board will help to minimize the risk of confusion for the people involved. It is especially useful when members of the advisory board might be a part of a board of directors, or have just joined an organization for the first time.
