This is the 5th article in our 5 part series about advisory boards. The 1st explains what an advisory board is, the 2nd explains why you may have an advisory board, the 3rd discusses how to select the board, and the 4th explains the difference from a Board of Directors.

The role of a director is a well-defined role, with clear rights and obligations under the Corporations Act, general law and corporate governance documents including the Shareholders Agreement. The role of an advisory board member is less clear, as it is not set out in the Corporations Act or the corporate governance documents.  You need to explain the advisory board role, and make it clear that this is not a director’s role.

The key documents for an advisory board are:

  • Terms of Reference;
  • Intellectual Property Assignment Agreement;
  • Advisory Board Agreement;
  • Agenda; and
  • Minutes.

Terms of Reference

The Terms of Reference are an introduction to, and an overview about, the advisory board.

An advisory board may be less familiar to people than a board of directors, and the roles and responsibilities are less clear.  As well as a formal legal agreement for the advisory board members to sign, it is helpful to have an overview document.  You can provide this to potential advisory board members, when you contact them to be on the advisory board.

The Terms of Reference set out:

  • The names and titles of the members of the advisory board;
  • The purpose of the advisory board;
  • How often meetings will be held and in what form, for example in person or by video conference;
  • How long each member of the advisory board is appointed, e.g. 2 or 3 years;
  • The rights and responsibilities of the advisory board members, including the crucial information that advisory board members are not directors and do not have power and influence over the company; and
  • The Terms of Reference need to make it clear that the advisory board will make recommendations rather than decisions, and that the company will ultimately be accountable for its own actions.

Intellectual Property Assignment Agreement

It is not uncommon for companies to require their advisory boards to assign their intellectual property rights to the business they advise. It is worth noting that these agreements are also known as Rights Agreements or IP Transfer Agreements.

The member of the advisory board is known as the assignor, whereas the company being advised by the advisory board members is known as the assignee.

Advisory Board Agreement

The Advisory Board Agreement is the formal legal agreement between the company and each member of the advisory board.

The Corporations Act defines directors as (i) people whom are appointed as directors, but also (ii) non-elected people with power and influence over the company.  Such people are known as shadow directors. A shadow director is someone in accordance with whose directions or instructions the directors of the company are accustomed to acting.

It needs to be clear in the Advisory Board Agreement that the advisory board does not have these powers or obligations.  Your advisory board agreement should be clear that advisory board members do not have power and influence over the company. The advisory board cannot give directions or instructions to the directors of the company. The company is not required to act in accordance with directions or instructions of the advisory board. This clarifies the role and helps protect your advisory board from being seen as a director and having director’s liability. 


The meeting is a formal event with minutes recorded and action items noted.

The Agenda needs to be clear on when the meeting starts and ends.  A chair needs to be appointed to run the meeting.  A secretary needs to be appointed to take minutes, then circulate the meeting minutes and any action items.

For subsequent meetings, a first item on the agenda is the approval of the previous meeting minutes.


The minutes record the key items discussed and any action items.

Key Takeaways

We hope that this series of 5 articles on advisory boards is very useful to you and your business, to help you with the inspiration, practical steps and legal information to assist you to create an advisory board.

For assistance from our business lawyers in reviewing or drafting any of these legal documents, contact LegalVision on 1300 544 755.

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