- The board of directors a team of people appointed to provide leadership of the company and is led by a Chairman.
- A statutory board is an entity formed by an act of parliament to provide a specific function. For example, the National Health Services of the United Kingdom could as well be referred to as a Statutory Board — for health services.
As the name suggests, a statutory board is one that is formed by an act of Parliament of any given country with a clearly defined mandate or purpose, powers, rights, and obligations. Such boards (also known as parastatals or agencies) have defined legal status to perform a specific function on behalf of the government.
For example, in the United States, an institution like the FBI, was formed by an act of parliament to provide a specific function of investigations across all states. In this context, one could refer to the FBI as a board or entity or organization or institution. It depends on the naming nomenclature of a given country. In some country’s government entities are called Statutory Boards. In other countries, they are called Authorities or Agencies or Parastatals.
A board of directors, on the other hand, is a group or team of professionals appointed by the company’s shareholders or equity holders or founders and investors to represent their interests to provide oversight and going concern for the long term success of the organization.
Source: Internet photo.
Allow me to digress a bit. But you will love it.
Look at it this way: the owners of any country are its citizens. In a democratic country, all eligible voters elect their representatives to form a Parliament. And it is this parliament that then makes laws and regulations that define the rights and responsibilities of the citizens in that particular country for effective co-existence, national unity, and good life for everyone such that no one enjoys better life at the expense of the other citizen. For this reason, democratic governments are said to be better than dictatorial governments because no one is above the law in real democratizes. Other countries like developing ones are pseudo-democracies in the sense that elections are done for mere window-dressing. That is why such countries are said to be developing or least developed since there are huge disparities between the haves and the have nots, and the safe and the very unsafe citizens.
Likewise, shareholders or owners of the business appoint qualified professionals on the board to provide leadership. Today, there are guidelines to follow to appoint board members. The Sarbanes Oxley Act, King IV report on corporate governance, Guidelines by top Stock Exchange like NY, London or Tokyo, etc, and other best practices may be used for public listed companies when selecting qualifying members. For private companies, you can appoint anyone on your board.