Reading time: 2 minutes

First let’s start with – what is an advisory board?  They are a group of professionals in particular industries who provide advice to your board of directors. You can choose your members from a wide variety of industries to suit the needs of your business. Advisory boards have become particularly popular for start-ups and small businesses that have limited capital. Advisory boards are also quite useful for large businesses that want to gain a third opinion on the direction of their business!

An advisory board is a great way to gain a wealth of experience with minimal costs. Members will work closely with your company to help it reach its potential. However they are not a substitute for your board of directors. An advisory board should only be relied upon for broad strategic advice. Directors of your company can take into account the insights and guidance of the advisory board but should not base decisions simply on the opinions of the advisory board members.

Directors and advisory board members hold very different roles. Directors of a company are responsible for making decisions for the everyday running of a company. They usually are employed by the business or hold shares in the business. Additionally directors hold both statutory and fiduciary duties to the company. They include the duty to exercise due care and diligence in relation to all decisions. Failure to meet these duties can result in severe penalties under the Corporations Act 2001 (Cth). You should make sure that the directors in your company are aware of all their duties and obligations to your company.

Members of an advisory board have no decision-making power whatsoever. They are there to provide guidance and advice only. Directors should take care to make sure they are not unduly influenced by members of the advisory board. Where this occurs, members may become de facto or shadow directors for the purpose of the Corporations Act 2001 (Cth). In cases such as this, the members will take on the same statutory and fiduciary duties of directors of the board and may breach that duty where they do not exercise due diligence. Companies should take care when outlining the roles and responsibilities of an advisory board.

Are you considering setting up an advisory board? There are a number of legal issues you should be considering! Call LegalVision to discuss all of your options today!

Webinars

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Online
Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

Online
If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Online
Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer