A Board of Advice is great support for a sole Director

Corporate Governance is an important subject for all businesses, particularly companies.

Obviously, private companies must have at least one director (unless the company’s Constitution stipulates there must be more than one director) and many companies only have two directors.

In many two-director companies, one of the directors is virtually a ‘silent’ director.

This can be an unfortunate situation as the sole director or the only active director is not receiving ‘informed input about the business’ from a person with equal standing to the director.

In many companies, team members are not going to argue the point with a director, because they feel overwhelmed by the director’s authority. That can be an unfortunate position for the company as alternative strategies to what is being discussed may have been the correct position, if the person presenting them had the confidence of their convictions to do so.

The concept of a Board of Advice has assisted in overcoming the loneliness of being the ‘sole’ director of a company for many directors.

A Board of Advice should not be a social event. It is serious business and the people appointed should not be just mates of the director if the director wants to develop knowledge and skills from the association with a few people who have different skills, knowledge and abilities to him/her.

A Board of Advice is not incorporated within the Corporations Act and therefore the members should only give advice and not give any instructions to a director or any team members.

The final decision on any issue should always be made by the Board of Directors.

The key aspect of establishing a Board of Advice is that there will be regular meetings, preferably monthly, on a set day and time. There should always be an agenda and reports on the activities of the company should be sent to the Board of Advice members at least 72 hours prior to the meeting. This will allow time for the Board of Advice to read the reports and turn up or tune in (if they’re accessing remotely) with their ‘brain in gear’ because they have read the reports and have given consideration to what has been reported so that they are in a position to give advice to the Director.

To find out more about the Board of Advice as it relates to your company, contact Towers Business Development on 1800 232 088 or email .