Leadership

What is an advisory board?

It's cold at the top, they say, and for an owner-manager it can also be lonely. Many owner-managers and entrepreneurs are very much alone with many vital decisions. In larger companies, the management often has a board, with which to turn these decisions, but entrepreneurs and smaller companies are not, as, for example, limited liability companies are required to have a board of directors. And the work of servicing such, perhaps they are quite ready for.

Leadership

In companies that are either not big enough or ready for a board, an advisory board is therefore often a good idea. With an advisory board, you get the opportunity to gather a handful of competent people who can advise you on the things you may not be quite sharp on yourself. And you avoid the legal quirks that come with a board.

If you are unsure whether a board is a good idea, an advisory board can also function as a general test of what a board can do for you and your company. And not least, what it requires of you and the company to "service" a board.

An advisory board is therefore a voluntary measure that has been put in place solely to advise the business owner or director.

The difference between an advisory board and a board of directors is i.a.

  • An advisory board is optional while a board of directors is in some cases statutory
  • An advisory board, as the name suggests, gives advice. A board of directors has greater powers and has, among other things, power to override the CEO's decisions
  • The remuneration is often different
  • Members of an advisory board have no legal responsibility in relation to the company

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What is an advisory board?

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