I should have educated myself about the legal documents

I never paid much attention to the legal work that was done when we formed the company. There was so much detail it was overwhelming. I assumed the lawyer knew what she was doing so I just signed things.

The first problem arose when the Board couldn’t agree on the terms of an employment contact for our new CFO. Eventually we had to vote and it was two in favor and two against. The issue was the options package.  It turned out that we needed a super majority to appoint a director and distribute options.

We only had four directors so there was no way to break the tie. We finally hired an arbitrator. We appointed the CFO, but two Director harbored deep resentment.

The next problem was when our senior sales manager resigned. The Directors did not want him to keep his options, but the incentive scheme granted them to him after 18 months. The Directors wanted to change the scheme but couldn’t make it retrospective.

The next problem was when we needed 95% of all shareholders to approve a new investment. Three small shareholders responsible for 5.2% of the shares refused. We had to buy them out at a premium.

What's the difference between a Board of Directors and an Advisory Board?

I know that most start ups have a Board of Directors and an Advisory Board. Here are my questions:

What’s the difference between a Board of Directors and an Advisory Board?

What authority does the Advisory Board have?

How often should each board meet?

How many members should each board have?

Who should I ask to be on them? Should I ask friends?

How do I get people I admire but don’t know well to join?

How do I compensate people?