In a statement released to the media yesterday, the Scarlets say Davies's place on the board means 'stronger bonds than ever between playing and business functions'.
Davies will continue to oversee the Scarlets' rugby operation, including coaching, conditioning, performance and squad evaluation.
Davies joined the Scarlets as Director of Rugby in 2006 after performing a similar role at Leeds Tykes. He said: "Llanelli rugby has a proud history but also a dynamic, vibrant future. I'm delighted to accept the invitation to join the board."
In addition to Davies's appointment, namesake Gareth switches from Commercial to Managing Director.
Both will continue to report to Gallacher, who said: "We're delighted to welcome these excellent young professionals to the board. The changes reflect how highly we value the vitality and expertise of Gareth and Phil and illustrate how important they are to growing the region.
"As the professional era evolves, and as the Scarlets relish the prospect of an exciting move to our new stadium, it's vital that we develop the structure of our business.
"Since Gareth arrived he has achieved great advances in generating revenue through powerful commercial partnerships."
Gareth Davies will oversee all the region's non-rugby functions. These include finance, full operational control of the new stadium, the commercial plan, community activity, marketing and media partnerships. Major commercial partners for the region include WRW and Dyfed Steels.
Gareth Davies was previously Chief Executive of rugby league club the Bradford Bulls, having been Head of Sports Marketing at Reebok UK.
He said: "We've made great commercial and customer service advances in the past year at the Llanelli Scarlets but the best is yet to come. We must ensure that all revenue opportunities at the new stadium are fully utilised seven days a week and that the matchday experience there is second to none."
Gareth Davies's new role will mean that Gallacher can concentrate more closely on his strategic role at the region, including player recruitment, regional rugby development and links with Heineken Cup organiser, European Rugby Cup, the Welsh Rugby Union and the three other Welsh regions.