A board of directors is a group of individuals who are responsible for the oversight, control and governance of an organization. They are accountable for the legal obligations of a company and are held to a strict level of accountability. If they fail to perform their fiduciary duties and obligations, they could be personally held accountable.
A group of people who advise and mentor a company https://theirboard.com/what-it-takes-to-be-an-effective-board-member/ 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 risk that could be detrimental to the business.
Idealy, an organization should clearly define the purpose of its advisory board in all official documentation such as meeting minutes and communications via verbal to avoid confusion. This will help ensure that they don’t accidentally stray into the realm of a board of directors, which could have serious legal consequences for members if they’re not fulfilling their fiduciary obligations.
This distinction is somewhat blurred in the real world, with organisations sometimes referring to their advisory boards as “the board.” It’s a good idea to put this in writing in order to have a sense of clarity and to avoid any accidental missteps. A formal written declaration defining the role of an advisory board helps to avoid confusion for the people involved. It is particularly useful for those whose members of the advisory board might be members of a board of directors or are new to the company.
