Board of Advisors: Who Are They and What Is Their Role?

Last updated on February 6, 2023

men and women in a business meeting

Whether you are the founder of a start-up faced with rapid business expansion or the owner of a small-and-medium-sized enterprise (SME) eager to identify the next growth opportunity, you may realise that your demand for managerial support is on the rise. One way to increase your company’s management capacity without incurring the costs of hiring a full-time management team is to create a board of advisors.

If you are interested, read on to find out more about:

What is a Board of Advisors? 

A board of advisors refers to an informal group of professionals who render advice on the management of a company or an organisation. As an informal group, a board of advisors primarily plays a consultative role and does not have any decision-making power.

Given its informal nature, a board of advisors is not regulated by law and may be structured in any way that the business owner finds helpful for the company. It can consist of any number of individuals from any sector or role (discussed below), as long as the owner believes that these individuals can provide useful advice.

What are the Main Differences Between a Board of Advisors vs a Board of Directors?

When you first encounter the term “board of advisors”, you may wonder whether it bears any relationship with the more familiar term “board of directors”. In reality, these two boards are two completely separate structures of a company, and they serve very different purposes.

The key differences between a board of advisors and a board of directors are summarised in the table below. You may read on to find out more about the features of a board of advisors highlighted in this table in later sections of this article.

Board of Advisors Board of Directors
Duties/ Functions A board of advisors renders advice to the company. A board of directors makes important executive decisions for the company. Their decisions are binding on the company. 
Degree of Formality A board of advisors is formed informally. A board of directors is a formal structure of the company and is regulated by law. They owe special legal duties to the company.
Manner of Constitution Advisors are informally selected by the owner/founder/controller of the company. Directors are elected by shareholders and formally appointed.
Voting Right Advisors hold no voting rights and have no decision-making power. 

They primarily serve in an advisory or consultancy capacity.

Directors are eligible to vote in a board meeting. Decisions arising from board meetings (known as “Directors’ Resolutions”) directly impact the running of the business. 
Typical Membership Profile Advisors are typically experts selected from relevant fields. Directors are typically elected to represent various interests (e.g., interests of majority shareholders, minority shareholders and creditors). They often require assistance from industry experts or specialists to oversee business operations.
Method of Compensation Advisors typically receive stock-based compensation, such as options. Sometimes advisors are not paid any financial compensation (e.g., in the case of non-profit organisations). Directors are usually paid a fixed salary.

Is a Board of Advisors Required For All Companies?

As you may be able to guess from its informal and unregulated nature, having a board of advisors is not a legal requirement in Singapore. Companies can decide for themselves whether to constitute a board of advisors, according to their needs.

Who Can be on the Board of Advisors?

While there are no hard and fast rules on who to select as an advisor, a board of advisors tends to include a mix of professionals across different sectors (e.g. public, private or non-profit) and roles (e.g., a legal advisor, a financial advisor, a Human Resource manager, a business strategist, and a marketing advisor).

In real life, the selection of appropriate advisors would largely depend on your company’s particular needs.

For example, CRIB, a local non-profit organisation aspiring to empower female entrepreneurs, has a board of advisors comprising 6 prominent female professionals from both the public (e.g. Minister Grace Fu) and the private sectors (e.g. Ms Claire Chiang, BBM). This is because the entrepreneurial culture requires both familiarity with state policy initiatives and private business acumen. Additionally, the all-female composition of the board allows CRIB to stay true to its branding as an organisation “helmed by women, for women”.

From the composition of CRIB’s board of advisors, you can see that a board of advisors are selected to suit an organisation’s unique needs, based on its nature and activities.

To further illustrate, representatives from downstream retailers may be brought in as advisors if a retail company wishes to understand its customers’ concerns better. A tax specialist may be included if the company is involved in a business area where there is a need to understand and appreciate the relevant tax laws or regulations that might affect the company.

Regardless of who you select as an advisor, the expertise contributed by the advisors should jointly add to the company’s pool of skills and knowledge.

What are the Roles and Responsibilities of a Board of Advisors?

The specific roles and responsibilities of a board of advisors depend on the needs of your company. In general, a board of advisors can play a key role in a company’s business development and boost investor confidence.

Business development

A board of advisors can contribute to the expansion of your company in two major ways.

First, as your company expands, it needs to handle increasingly technical and specialised issues. Advisors with relevant expertise can step in to address these problems. For instance, a newly incorporated start-up may rely on online contract templates to structure simple transactions. However, an advisor from the legal sector can oversee more complicated financing transactions to avoid potential disputes.

Second, advisors may potentially link their own business network with your company and create new business opportunities. For example, a company specialising in manufacturing may hire an advisor who used to work in the upper management team of a retailer. In addition to providing advice from a retail perspective, the advisor can also connect his existing clients to the company, thereby bringing in new customers and business opportunities.

Attracting investors and confidence in the company

The presence of a board of advisors means that a company is well-advised by business veterans. This can bolster the image of a newly found company and boost investor confidence.

Advisors do not have to be paid a salary. However, when they do, they usually receive stock-based compensation, such as options, which allows them to benefit from an increased valuation of the business.

Such options typically allow an advisor to buy the company’s shares at a fixed price on a future date to be determined by the advisor (though usually within a set time frame). For example, if an advisor is granted an option to purchase 500 shares at $50 per share within 3 years, they can purchase the shares when the market price is significantly higher than $50 per share (e.g., at $80 per share), and earn the price premium. As such, the advisor will be incentivised to help the business increase its valuation.

How is a Board of Advisors Appointed?

Since a board of advisors is informal in nature, they are selected by the owner of the company rather than appointed through a formal process.

As the owner of a company, you are free to structure the board of advisors in any manner as you deem fit. However, you should take into account the following considerations:

  • Advisors should not be chosen simply because they are well-acquainted with the owners of the company. The focus should be on their relevant experience, expertise and knowledge.
  • Having too many advisors on the board can put a financial strain on a small company if they are all compensated financially. It can also lead to conflicts in viewpoints as different advisors may have different opinions. Quality is more important than quantity.
  • Family members of the owners should generally not be included on the board. This is because a board of advisors is meant to bring in an outsider’s perspective to the company. Personal connections between the advisors and the owners may cloud the advisors’ objectivity and professional judgment.

Can Advisors Also Hold Full-Time Jobs?

There is no rule or law against advisors holding full-time jobs in other companies. In fact, it is often helpful to have advisors who occupy influential full-time positions in their respective fields. This reassures potential investors that the advisors are familiar with the business practice in their field and are capable of providing relevant advice to your company.

However, when you approach a potential advisor, you should ensure that the advisor would not be in any conflict of interest by taking on an advisory role in your company.

For example, if your advisor is also a manager in one of your suppliers’ companies, he will be in a position of conflict of interest when the two companies are negotiating a sales contract. Given his connection to your company, he may be inclined to give your company more concessions, which may go against his duty as a manager of that company. If you are unsure whether your advisor is/ will be in a conflict of interest, you may consult a corporate lawyer to address your queries.

What is the Length of an Advisor’s Appointment?

As the owner of a company, you can freely negotiate with your advisor on their length of appointment. However, it is important that you include this as a term in your contract with the advisor.

This is because if the contract does not state a specific appointment term, disputes may potentially arise between your company and the advisors on the length of their appointment.

How Can an Advisor Resign From Their Role/the Company?

An advisor can resign from their role based on termination clauses set out in their contract with your company. If the contract does not specify a method of termination, disputes between your company and the advisors over how and when to terminate the advisory relationship may potentially ensue. Therefore, it is important to include a termination clause in the contract.

The constitution of a board of advisors should contribute to the practical needs of a company. Therefore, the selection of advisors should not be formalistic. Each and every advisor placed on the board should bring in knowledge and skillsets that are important to your company’s operation and growth.

When engaging an advisor, a company should ensure that there is no conflict of interest between the candidate’s formal employment role and their role as an advisor to the company. Moreover, the contract between the company and its advisors should be clear, detailed, and concise, so as to avoid future disputes. A corporate lawyer may be engaged to iron out these issues.

If you have further questions or require any guidance or advice on the selection of advisors, you may wish to consult a corporate services firm.

Appointment and Removal of Company Officers and Other Key Personnel
  1. What is a Nominee Director & How to Appoint One in Singapore (With FAQs)
  2. Independent Directors: Who are They and What is Their Role?
  3. Board of Advisors: Who Are They and What Is Their Role?
  4. Appointing Company Directors in Singapore: Eligibility, Process etc.
  5. Managing Director vs CEO in Singapore: Roles and Obligations
  6. Guide to Directors' Remuneration in Singapore
  7. Directors' Duties in Singapore
  8. Shadow Directors: Who are They and What Duties Do They Owe to the Company?
  9. How to Remove a Director from a Company in Singapore
  10. Removal and Resignation of Company Auditor in Singapore
  11. Appointing a Company Secretary: Roles and Responsibilities
  12. Appointing an Authorised Representative for Foreign Companies in Singapore
  13. Process Agents in Singapore
Holding Meetings
  1. What are Annual General Meetings (AGMs) in Singapore?
  2. How to Hold Extraordinary General Meetings (EGMs) in Singapore
  3. How to Hold a Board Meeting in Singapore
Shareholder Matters
  1. Share Buybacks in Singapore: Procedure, Cost and More
  2. How to Split Shares (or Stocks) in a Singapore Company
  3. 2 Ways to Remove a Singapore Company Shareholder ASAP
  4. What are Treasury Shares? Guide for Singapore Companies
  5. A Guide to Paid-Up Capital in Singapore
  6. Preparing a Register of Shareholders for a Singapore Company
  7. How to Issue Shares in a Singapore Private Company
  8. Guide to Transferring Shares in a Singapore Private Company
  9. Your Guide to Share Certificates in Singapore: Usage and How to Prepare
  10. Shareholder Rights in Singapore Private Companies
  11. Shareholder Roles and Obligations in Singapore Companies
  12. Dividend Payments Guide for Singapore Business Owners
  13. Share Transmission: What Happens If a Shareholder Dies in Singapore?
  14. How to Reduce the Share Capital of Your Singapore Company
  15. Buy-Sell Agreements: How to Write & Fund Them in Singapore
  16. Oppression of Minority Shareholders
Compliance
  1. Is Your Business Collaboration Competition Law-Compliant?
  2. Explained: Registered Filing Agent for Singapore Businesses
  3. Transfer Pricing Obligations of Singapore Companies
  4. Adhering to Trading Sanctions and Restrictions in Singapore
  5. Cyber Hygiene Compliance Guide for Singapore Companies
  6. Corporate Social Responsibility For Businesses in Singapore
  7. Essential Regulatory Compliance Guide for Singapore Companies
  8. Dormant Companies and Their Filing Obligations in Singapore
  9. Anti-Money Laundering Regulations and Your Business: What You Need to Know
  10. Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
  11. Can Singapore Businesses Legally Conduct Lucky Draws?
  12. Restaurant Inspection and Food Safety Rules in Singapore
Company Management
  1. Does Your Company Need a Legal Team (In-House Counsel)?
  2. Acqui-Hiring of Singapore Companies: How Does It Work?
  3. Can a Company Director Take Legal Action Against Another Director?
  4. How to Change the Name of Your Singapore Company
  5. Can Directors be Liable for Company Debts in Singapore?
  6. Company Loans to Directors/Shareholders in Singapore
  7. 3 Types of Insurance Every Singapore Business Needs
  8. Creating and Registering Charges in Singapore: Guide for Companies
  9. Guide to Effective Business Continuity Planning in Singapore
  10. Business Asset Sale & Disposal in Singapore: How Do They Work?
  11. 5 Ways To Resolve Business Partnership Disputes in Singapore
  12. How to Commence a Derivative Action on Behalf of a Company in Singapore
  13. Business Will: How to Pass on Your Business to Your Successors in Singapore
Company Documents
  1. Record-Keeping Requirements for Singapore Companies
  2. Company Constitutions in Singapore and How to Draft One
  3. Company Memorandum and Articles of Association
  4. Company Resolutions: What are They?
  5. Board Resolutions in Singapore
  6. Minutes of Company Meeting in Singapore: How to Record
  7. How to Set Up a Register of Controllers
  8. How to Set Up a Register of Nominee Directors
  9. Guide to Filing Financial Statements for Singapore Business Owners
  10. Filing Annual Returns For Your Business
Tax, Accounting and Audit Matters
  1. Carbon Tax in Singapore: What is the Rate and Who Must Pay?
  2. Laws and Penalties for GST Evasion in Singapore
  3. 6 Common Taxes in Singapore For Individuals & Businesses
  4. Singapore Corporate Tax: How to Pay, Tax Rate, Exemptions
  5. Start-Up Tax Exemption Guide for New Singapore Companies
  6. GST Registration: Requirements and Procedure in Singapore
  7. What is Withholding Tax and When to Pay It in Singapore
  8. Singapore Influencers: Here's How to Calculate Your Income Tax
  9. Investigating Tax-Evading Business Owners in Singapore
  10. Small Business Accounting Services in Singapore
  11. Company Audits in Singapore: Requirements and Exemptions
Data Protection
  1. Suspect a PDPA Data Breach? Here's What to Do Next
  2. Must You Notify PDPC About a Data Breach in Your Business?
  3. Data Room: Should Your Singapore Company Set Up One?
  4. Victim of a Data Breach? Here’s What You Can Do
  5. Summary: Your Organisation's 10 Main PDPA Obligations
  6. Essential PDPA Compliance Guide for Singapore Businesses
  7. PDPA Consent Requirements: How Can Your Business Comply?
  8. Is It Legal for Businesses to Ask for Your NRIC in Singapore?
  9. How To Prevent Unauthorised Disclosure When Processing and Sending Personal Data
  10. Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
  11. Drafting a Comprehensive Privacy Policy For Your Singapore Website
  12. GDPR Compliance in Singapore: Is it Required and How to Comply
  13. Appointing a Data Protection Officer For Your Business: All You Need to Know
  14. How Can Companies Dispose of Documents Containing Personal Data?
  15. Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
  16. How to Legally Install CCTVs for Home/Business Use in Singapore
  17. Is Web Scraping or Crawling Legal in Singapore?
  18. Legal Options If Employees Breach Confidentiality in Singapore
Marketing
  1. Social Media Marketing: Legal Guide for Singapore Businesses
  2. Your Guide to E-commerce Website Terms of Service in Singapore
  3. Dealing with Defamation of Your Business: Can You Sue?
  4. Sending Email Newsletters That Comply With Singapore Law
  5. A legal guide to drafting a social media policy for your company
  6. Your Guide to a Media Release Form in Singapore
  7. Your Guide to an Influencer Marketing Agreement in Singapore
  8. Outdoor Advertising: How to Legally Display Public Ads in Singapore
Fintech and Payment Services Advisory
  1. A Guide to Digital Bank Regulation in Singapore
  2. Applying for a Major Payment Institution Licence in Singapore
  3. Applying to the MAS FinTech Regulatory Sandbox
  4. Payment Services Act Licensing Guide for Fintech Businesses
  5. How to Get a Payment Service Provider Licence in Singapore
  6. Financial Adviser's Licence Guide for Singapore Businesses
  7. Capital Markets (CMS) Licence Requirements in Singapore
  8. How to Offer E-Wallet Services in Singapore: Licensing Guide
  9. Digital Payment Token Services Licence Guide in Singapore
  10. How to Legally Offer Crypto Services in Singapore
Franchising
  1. Starting a Franchise in Singapore: What Franchisors Should Look Out For
  2. Running a Franchise in Singapore: What To Look Out for as a Franchisee
Debt Restructuring
  1. What is Judicial Management and How It Works in Singapore
  2. Schemes of Arrangement: How They Work and How to Apply
  3. Informal Debt Restructuring and Workout in Singapore
Ending a Business
  1. How to Restore a Struck-Off Company in Singapore
  2. Claw-Back of Assets From Unfair Preference and Undervalued Transactions
  3. Should You Save or Close Your Zombie Company in Singapore?
  4. Voluntary Suspension of Business in Singapore: How to Handle
  5. Winding Up a Singapore Company: Grounds and Procedure
  6. Closing Your Singapore Business: What You Need to Settle
  7. Striking Off a Company
  8. Restoring a Company That was Struck Off Without You Knowing
  9. Dissolution of partnerships in Singapore
  10. What Should a Creditor Do When a Company Becomes Insolvent?
  11. How to File a Proof of Debt Against a Company in Liquidation
  12. Validation of Payments Made by Companies Being Wound Up