Australian Securities and Investments Commission v Macrolend Pty Ltd (No 3)

This case arose from a long-running fundraising model used across a group of businesses associated with David Hodgson. ASIC said the group had raised about $109 million from investors through three separate arrangements: Macrolend's loan and promissory note arrangement, the Kradle investment arrangement, and Great Southland's promissory note arrangement.

The commercial background matters. Mr Hodgson had built what the judgment describes as the Paladin Group. Macrolend was used as a commercial lender. According to the background section, its model was to borrow money from lenders and use that money to grow its own business, including by lending to third parties and entities within the group. Great Southland, incorporated in Belize, was said to operate in a similar way and to service offshore lenders who preferred not to lend directly in the Australian market. The Kradle arrangement sat within a subgroup connected to software businesses and a software product called Kradle.

ASIC's concern was not just that money had been raised. It was that the legal structure of the fundraising and the way it was promoted to investors triggered Australian financial services law. The regulator also challenged what prospective investors were told about Kradle's asset value, how their money would be used, and whether a public listing was realistically on the horizon.

The Court's orders are especially useful because they set out the relevant arrangements and time periods with precision.

1. Kradle Investment Arrangement
Macrolend raised funds from investors for investment in the Kradle software product during the period July 2018 to 31 May 2023. The Court declared that investments were made pursuant to a facility that was a financial product. It also declared that the arrangement provided for investors to obtain a legal or equitable right or interest in a share, and therefore in a security. Macrolend was declared to have carried on a financial services business without an AFSL during July 2018 to 31 May 2023 under s 911A(1), and during 13 March 2019 to 31 May 2023 under s 911A(5B).

2. Macrolend Loan and Promissory Note Arrangement
Macrolend raised funds under instruments described as loan agreements and promissory notes during 5 January 2015 to 25 January 2022. The Court declared that each instrument entered into by investors for that arrangement was a debenture, and therefore a security and a financial product. Macrolend was declared to have carried on a financial services business without an AFSL during 5 January 2015 to 25 January 2022 under s 911A(1), and during 13 March 2019 to 25 January 2022 under s 911A(5B).

3. Great Southland Promissory Note Arrangement
Great Southland raised funds from investors through promissory notes during 15 January 2015 to 9 August 2023. The Court declared that each instrument entered into by investors for that arrangement was a debenture, and therefore a security and a financial product. Great Southland was declared to have carried on a financial services business without an AFSL during 15 January 2015 to 9 August 2023 under s 911A(1), and during 13 March 2019 to 9 August 2023 under s 911A(5B). It was also declared to have carried on business in Australia without registration.

4. Mr Hodgson personally
The Court declared that Mr Hodgson himself carried on a financial services business in Australia without an AFSL during 5 January 2015 to 9 August 2023 under s 911A(1), and during 13 March 2019 to 9 August 2023 under s 911A(5B). It also declared that from 13 March 2019 to 9 August 2023 he was involved in Macrolend's and Great Southland's contraventions.

The legal issues fell into two broad groups.

First, the Court had to consider the financial services character of the fundraising. Were the instruments and arrangements really financial products under the Corporations Act? If so, were Macrolend, Great Southland and Mr Hodgson carrying on a financial services business in Australia without an AFSL? In Great Southland's case, was the Belize company also carrying on business in Australia without being registered?

Secondly, the Court had to deal with the investor communications used for the Kradle fundraising. The judgment identifies three categories of representations. One was the balance sheet representation about Kradle's intangible assets. Another was the use of funds representations, including statements that substantially all investor funds would be used to grow Kradle and that up to $50 million would be loaned to Kradle on stated terms. The third was the IPO representations, namely statements that a public listing connected with the Kradle software product was expected or intended in 2021 or 2022.

By the time of trial, many issues had been admitted. But the Court still had to satisfy itself that declarations were appropriate. The judge expressly noted that a court does not simply rubber stamp agreed orders between a regulator and defendants. The Court also had to resolve the wording of the declaration about the balance sheet representation and decide whether Mr Hodgson should be disqualified from managing corporations, and if so for how long.

The most striking part of the case for many business owners will be the misleading conduct declarations.

Asset value representation
Between 13 February 2019 and 11 December 2020, Macrolend and Mr Hodgson prepared and caused information memoranda to be issued to prospective investors in the Kradle arrangement which conveyed that Kradle Software Pty Ltd's intangible assets, as recorded on its balance sheet as at 30 June 2018, were valued at $1,027,140,000. The Court declared not only that this representation was misleading, but also that Kradle did not hold intangible assets in that amount and that the balance sheet prepared by Kradle's chartered accountants recorded intangible assets of $11,810. That discrepancy is central to understanding the seriousness of the conduct.

Use of funds representations
Between 5 July 2018 and 15 November 2021, Macrolend and Mr Hodgson issued information memoranda conveying that substantially all investor funds would be used to grow Kradle and that up to AU$50 million would be loaned to Kradle at 4% per annum. The Court declared that the true position was that the funds would be used by Macrolend for various purposes, so not all, or substantially all, of the funds would be used to grow Kradle or loaned to Kradle on those terms. The Court also declared that there were no reasonable grounds for making those representations.

Specific secured loan statements
Between about 13 February 2019 and 15 November 2021, further statements were made in information memoranda about selling shares or convertible notes and then making a secured loan of up to $50 million to Kradle for terms of 3, 4 or 5 years at stated interest rates. The Court declared that not all, or substantially all, of the funds would be loaned to Kradle on those terms, that for some of the statements there was no loan agreement between Macrolend and Kradle on the stated terms at the time, and that there were no reasonable grounds for making the representations.

IPO representations
Between about 13 February 2019 and 15 November 2021, Macrolend and Mr Hodgson also issued materials conveying that Corearth Holdings expected to achieve a public listing in respect of the Kradle software product on the London and or NASDAQ stock exchanges in 2021 or 2022, and that Kradle intended there would be a public listing in 2022. The Court declared that there were no reasonable grounds for making those representations.

For businesses, the practical point is simple. Statements about valuation, use of funds and future listing plans are not harmless sales language. If they are conveyed to investors as present facts or realistic plans, they need a proper factual basis at the time.

The outcome went beyond declarations.

Macrolend was restrained from carrying on a financial services business in Australia without an AFSL, except as permitted by the Corporations Act. It was also ordered to post a notice of the orders on the website www.paladincorp.com.au for 90 days in a form approved by the Court.

Mr Hodgson was restrained from carrying on a financial services business in Australia without an AFSL, except as permitted by the Corporations Act. He was also disqualified from managing corporations for five years from 19 September 2025.

Great Southland was restrained from carrying on business in Australia unless registered under the relevant foreign company registration regime, and also restrained from carrying on a financial services business in Australia without an AFSL, except as permitted by the Corporations Act.

All three defendants were ordered to pay ASIC's costs on a party-and-party basis, to be taxed if not agreed.

These orders matter because they show the range of consequences that can follow from a fundraising structure that is legally non-compliant. The exposure is not limited to a declaration that something went wrong. It can include injunctions that affect ongoing operations, publication orders that require public notice, costs orders, and personal disqualification of a director.

There are several practical reading points for businesses.

Documents do not define the legal outcome by themselves. If you raise money under a document called a loan agreement, promissory note or finance application, that does not settle whether the arrangement is regulated. The Court's declarations show that the legal substance may still be a debenture, a security or another financial product.

Related-party and group structures do not remove the risk. The background passages describe funds being used within a broader corporate group. That kind of structure can increase the need for careful legal analysis because the fundraising, on-lending and investor rights may be assessed as part of a broader arrangement.

Foreign entities still need to think about Australian rules. Great Southland was incorporated in Belize, but the Court declared that it carried on business in Australia without registration and carried on a financial services business here without an AFSL.

Forward-looking statements need reasonable grounds. If you tell investors that funds will be used in a particular way, that a secured loan will be made on stated terms, or that a listing is expected by a certain year, you need more than ambition. You need a real basis that exists when the statement is made.

Directors can be personally exposed. This was not treated as a company-only problem. The Court made declarations against Mr Hodgson personally, restrained him personally, and disqualified him from managing corporations for five years.

The key dates recorded in the judgment help put the case in context.

Macrolend's loan and promissory note arrangement ran from 5 January 2015 to 25 January 2022. Great Southland's promissory note arrangement ran from 15 January 2015 to 9 August 2023. The Kradle investment arrangement ran from July 2018 to 31 May 2023. The misleading conduct findings cover different periods within that broader Kradle fundraising, including 13 February 2019 to 11 December 2020 for the asset value representation and 5 July 2018 to 15 November 2021 or about 13 February 2019 to 15 November 2021 for the use of funds and IPO representations.

ASIC commenced the proceeding on 14 February 2024. The hearing took place on 14 to 16 July 2025. Judgment and orders were delivered on 19 September 2025.

For a business owner, the timeline shows that these issues can build over many years before they are tested in court. Long-running fundraising practices can still be examined in detail, and admissions made late in the process do not prevent the Court from making declarations and significant personal and operational orders.

This explainer is based on the Federal Court decision in Australian Securities and Investments Commission v Macrolend Pty Ltd (No 3) [2025] FCA 1158. The published material records the catchwords, orders, introductory passages and background facts, including the declarations made, the periods of contravention, the misleading representations identified by the Court, and the final orders for injunctions, publication, costs and disqualification.

The page focuses on what the Court declared and ordered, and on the practical compliance points that follow from those findings. It is general information only and not legal advice.