Zoho Founder Sridhar Vembu Ordered to Post $1.7 Billion Bond in US Divorce Case
US court orders Zoho founder Sridhar Vembu to post $1.7 billion bond in divorce case with estranged wife Pramila Srinivasan, citing concerns over asset transfers that breach restraining orders. The January 2025 order addresses proposed restructuring of Zoho's US operations and potential impact on marital property division under California community property law.
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A US court has directed Zoho founder Sridhar Vembu to post a $1.7 billion bond in ongoing divorce proceedings, marking a significant development in the high-stakes marital dispute that has drawn attention to asset movements within the technology company.
Court Raises Asset Transfer Concerns
In an order passed in January 2025, the court expressed concerns over post-petition asset movements and their potential impact on the division of marital property. The court observed that transfers of assets after divorce proceedings were initiated breached automatic temporary restraining orders designed to protect the marital estate.
The court noted that such movements could undermine its ability to fairly distribute assets and raised the risk that Vembu may not be able to meet any financial award in favor of his estranged wife if assets continue to be moved outside the United States.
California Community Property Law Applied
Under California family law, the court reiterated that property acquired during a marriage while the couple was domiciled in the state is treated as community property. This classification applies irrespective of whether the assets are held within or outside the US and covers all categories of property.
| Legal Framework: | Details |
|---|---|
| Applicable Law: | California family law |
| Property Classification: | Community property |
| Geographic Scope: | Assets held within or outside US |
| Coverage: | All categories of property |
Divorce Proceedings Timeline
Sridhar Vembu and his estranged wife, Pramila Srinivasan, are locked in divorce proceedings in the United States. Vembu relocated to India to his ancestral village of Mathalamparai in Tamil Nadu towards the end of 2019 and began running Zoho from there. He initiated divorce proceedings in 2021.
Pramila moved an ex-parte application in November 2024 seeking judicial intervention to halt a proposed transaction that would shift a revenue-producing community asset in the US to an external party.
Zoho US Operations Restructuring Scrutinized
The court examined a multi-step transaction involving Zoho's US operations restructuring. The business of Zoho Corporation in the United States, a fully owned arm of Chennai-based Zoho Corporation Pvt Ltd and treated as part of the marital estate, was proposed to be shifted to a separate entity controlled by Tony Thomas, a long-standing associate of Sridhar Vembu.
| Transaction Details: | Information |
|---|---|
| Original Entity: | Zoho Corporation (US) |
| Parent Company: | Zoho Corporation Pvt Ltd (Chennai) |
| Proposed Controller: | Tony Thomas |
| Relationship: | Long-standing associate of Sridhar Vembu |
| Legal Status: | Part of marital estate |
Court Rejects Explanations
The court rejected explanations put forward for certain transactions involving Vembu, Zoho, and T&V Holdings Inc. The stated reasons, including claims that restructuring was undertaken to avoid exposure to the US base erosion and anti-abuse tax (BEAT), were found to be unconvincing.
Bond Requirement and Timeline
Based on the material on record, the court concluded that a substantial bond was necessary to protect the respondent's ability to recover her share of the community estate at the conclusion of the divorce proceedings. While Vembu did not provide adequate justification for a lower bond amount, Pramila submitted sufficient evidence to support a bond of $1.7 billion.
The court directed Vembu to post the $1.7 billion bond within 45 days from January 15, 2025. However, there is no concrete information available to suggest whether the bond was posted within the specified timeframe.
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