A board of directors is an institution composed of individuals who are accountable for the governance, control and direction of the organisation. They oversee the legal responsibilities of a company and are held to a strict level of accountability. This means that if they fail comply with their fiduciary obligations, they can be personally accountable.

A group of people who advise and coach a company is an advisory board. The advice they offer is more direct and their focus is on development, growth and strategy, as opposed to reporting and governance, reducing risk and avoiding downside risk.

Ideally, an organization should establish clear guidelines for the work of their advisory board – not just in official documents such as meeting minutes but also in everyday verbal communication to avoid confusion. This will ensure that they don’t accidentally stray into the realm of a board data room providers of directors, which could have serious legal consequences for members if they are not performing their fiduciary duties.

The distinction can get somewhat unclear in practice as some companies refer to their advisory boards as “the board.” It’s worth putting this in writing to ensure of clarity and to avoid any unintentional mistakes. A formal statement that defines the role of an advisory board will aid in reducing confusion among those involved. This is particularly helpful when board members have been previously on the board or are new to the organisation.