Final answer:
The incorrect difference between a public and private company is that public companies must have at least two members, while private ones need only have one. In reality, both can have just one member.
Step-by-step explanation:
The correct answer to the student's question is (e) - A public company must have at least two members, whereas a private company need only have one member. This statement is NOT a valid difference between a public company and a private company. In fact, both private and public companies must have at least one member. The differences include: a) A public company must appoint a company secretary, while a private company is not required to do so; b) A private company must be formed with one director, whereas a public company must have at least two directors; c) Private companies can be created with a trivial amount of capital, while public companies must have an allotted minimum share capital of £50,000; and d) Public companies may offer their shares to the public, whereas private companies may not.
Shareholders who own a company elect a board of directors to choose the actual company managers. The number of votes a shareholder has is typically proportional to the number of shares they own. A private company is usually owned and operated by the individuals managing it on a daily basis and may exist in forms such as sole proprietorships, partnerships, or privately held corporations. Conversely, a public company issues stock that can be publicly traded and is owned by its shareholders, who elect directors to oversee the company.