A board of directors is an organisation of individuals who are responsible for the governance, control and direction of the organization. They are accountable for the legal obligations and accountability of a company. This means that if they don’t comply with their fiduciary obligations and are found to be in breach, they could be personally accountable.
A group of people who advise and coach the company is called an advisory board. They provide more practical guidance and tend to concentrate on growth, strategy and development instead of reporting and reporting, risk management, governance and avoiding risks that could be detrimental to the business.
Ideally, an organization should clearly define the role of its advisory board in all official documentation like meeting minutes and in communications via verbal to avoid confusion. This will help ensure that they do not accidentally cross 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 can be a bit blurred in practice in some instances, where organizations refer to their advisory boards as “the board.” It’s worth putting this in writing in the interest of clarity and to avoid unintentional mistakes. A formal written declaration defining the purpose of an advisory board will help to minimise the risk of confusion for the people involved. It is particularly helpful when members of the advisory panel may be a part of a board of directors or have just joined an organization for the first time.
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