Sridhar Vembu
Credit: X/@svembu
A US court hearing the divorce petition of Sridhar Vembu, co-founder and chief scientist of software products company Zoho, has directed him to post a $1.7-billion bond (approximately Rs 15,323 crore), citing concerns over post-petition asset movements and the potential impact on the division of marital property.
Referring to pre-trial findings, the California court observed that Vembu had not been transparent about certain financial transactions and acted “without regard for the law”, according to report by The News Minute.
The court, in the order passed in January 2025, observed that the transfer of assets after the divorce proceedings were initiated breached automatic temporary restraining orders in place to protect the marital estate. The order was passed in response to Vembu's estranged wife Pramila Srinivasan’s ex parte application filed in November 2024.
The court noted that such movements could undermine its ability to fairly distribute assets and raised the risk that the petitioner may not be able to meet any financial award in favour of the respondent if assets continue to be moved outside the United States.
Vembu, along with two of his brothers, founded AdventNet, a software development house for network equipment providers, in 1996. The firm was renamed Zoho Corporation in 2009.
Vembu relocated to his ancestral village in Tamil Nadu in 2019 and began running Zoho from there. He initiated divorce proceedings in 2021.
The divorce proceedings centre on the division of marital assets acquired during the couple’s marriage while they were domiciled in California, according to the report.
California law treats property acquired during the marriage as jointly owned, regardless of where those assets are held.
California family law
The court, in its order, reiterated that under California family law, property acquired during a marriage while the couple was domiciled in the state is treated as community property, irrespective of whether the assets are held within or outside the US, and applies across all categories of property.
In her ex parte application, Pramila sought judicial intervention to halt a proposed transaction, which, she argued, would shift a revenue-producing community asset in the US to an external party. This refers to the restructuring involving Zoho’s US operations.
Multi-step transaction
According to the report, the court examined a multi-step transaction through which the business of Zoho Corporation in the US, then 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 longtime associate of Vembu.
The case has drawn scrutiny over the movement of assets after the petition was filed. The court highlighted concerns that such transfers could complicate the fair distribution of the marital estate and potentially affect the respondent’s ability to recover her share at the conclusion of the proceedings.
The court, based on the material on record, concluded that a substantial bond was required to protect the respondent’s ability to recover her share of the community estate. According to the report, while the petitioner did not provide adequate justification for a lower bond amount, the respondent submitted sufficient evidence to support a bond of $1.7 billion. Following this, the court asked Vembu to post the $1.7-billion bond within 45 days from January 15, 2025. There is, however, no confirmation to suggest the bond was posted.