The board of directors when formed with the insiders, the members usually has no legal responsibilities. This type of board of directors is formed in order to make the company cost minimal.
It becomes easier for the company to recruit members because the membership is not as much difficult as to form the board of directors.
The company can avail with the technical support, expertise, skills and knowledge of the members which might not be available at the required level.
The insiders usually provide with unbiased advice and have irrational attitude.
Insiders can offer with new links/contacts which can generate extra sales or source of income.
That the board would be more likely to be objective and serious about its responsibility to oversee the corporation’s management.
The board of directors composed of insiders works like a group of experts but their advice is usually not considered seriously and might not be followed methodically leading into loss.
None of the members of such board of directors in this scenario have authority to collect any sort of information from management, resultantly their recommendations could only be based on what management had informed them and they might not be aware of the issue that management was not willing to share with them.
The members of boards of directors composed of insiders usually have no say or very little influence on the company's strategy and performance oversight of management.
Since they lack legal responsibilities therefore it becomes hard to hold the members of the board of directors in any scenario accountable or responsible of any advice they gave.
The board of directors might not consider their roles seriously and they might not contribute effectively in accordance to the duties of the real board members
The lessened opportunity to view potential successors in action or to obtain alternate points of view to management...