A board of directors is an institution comprised of individuals who are responsible for the management, control and direction of the organisation. They are accountable for the legal obligations of a company and are held to a high standard of accountability. This means that if they fail meet their fiduciary duty, they can be personally liable.

A group of individuals who mentor and advise the company is called an advisory board. They provide more hands-on guidance and tend to concentrate on strategy, growth and development instead of reporting, risk management, governance and avoiding risks that could be detrimental to the business.

Ideally, an organisation should outline clear guidelines for the role of their advisory boards – not only in official documentation such as meeting minutes but also in daily communication to avoid confusion. This will ensure that they do not accidentally cross into the realm of a board of directors, which can result in serious legal consequences for members if they’re not meeting their fiduciary duties.

This distinction can be a bit ambiguous in real life as some companies refer to their advisory boards as “the board.” It’s a good idea to put this in writing to ensure of clarity and to avoid unintentional mistakes. A formal written statement that defines the function of an advisory committee can help to minimise confusion among the people involved. This is especially helpful when members of the board were previously part of a board or are new to the organisation.

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