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What’s the Difference Between a Board of Directors and an Advisory Board?

Read on to find out if you need a board of directors or advisory board for your business decision making processes:


A board of directors is made up of individuals appointed by a company’s shareholders. They are responsible for setting strategic goals, and appointing the company’s Chief Executive Officer (CEO) among other significant results. All activities are determined by the powers, duties, and responsibilities given to it by an authority outside itself, as stipulated in its bylaws. Decisions made are usually deemed binding and must be enforced.


– Approval of the company’s annual budget
– Defining company policies and objectives
– Ensuring the availability of sufficient finances
– Determining company management salaries



An advisory board, on the other hand, comprises individuals selected by the CEO or Founder to advise management in the performance of company goals. Advice given is non-binding with members having no authority to vote on corporate matters or bear legal fiduciary responsibility. Non-profit organisations and small businesses tend to prefer this option, leveraging on the expert knowledge of appointed professionals.


– Develop an understanding of the business, market and industry trends
– Give “wise counsel” on issues raised by owners/directors or management
– Give unbiased insights and ideas from a third point-of-view (not involved in the operation of the business)
– Encourage and support the exploration of new business ideas




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Ify Halim is a Writer and media enthusiast based in Lagos. She enjoys writing self-help/inspirational articles with published work in UYD Magazine, Edufrica, Our Stories Inc. and The Keele Concourse. She currently works at, Nigeria’s Information Portal. Follow her on Twitter @MissHalim or visit her online space at


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