First a couple of quick definitions. A corporate board (or Board of Directors) is a legally
constituted body comprised of directors who are elected by the shareholders and charged
with the responsibility of serving the interests of the shareholders. The position of
corporate director is, therefore, an extremely important one from both a strategic and
legal standpoint. As such, a corporate director, along with senior executives, is potentially
at risk in the event of litigation directed against the company.
An advisory board (or Board of Advisors), on the other hand, is a group of industry
executives and professionals that are appointed by the company executives for advice
and support as the company grows. The advisory board is not a legal body and does not
have any of the legal duties that are the responsibility of the corporate board. The
advisory board does not generally get involved in issues that involve the administration of
the company and should, as a rule leave such matters to the corporate board. An advisor,
therefore, does not generally risk any of the potential liabilities that a corporate director
takes on.
