Background: This study focuses on three reforms which the Swedish government have performed: The abolishment of the audit requirement, the reduction of the legal capital requirement, and the reduction of the employment taxes. What effect have they had on the establishment of private limited companies?

Purpose: The purpose of this dissertation is to explain the influence government reforms have on the establishment and re-establishment of private limited companies inSweden.

Method: An explanatory study was performed to study the effect of the reforms, and a quantitative method was used which includes the positivistic and deductive approach.

Conclusion: For a majority, the reforms were not decisive; rather, they were contributory for founders’ decision to establish a private limited company. Many owners have re-established from different organizational forms to the private limited company form.