US court orders Zoho founder Sridhar Vembu to post $1.7 Bn bond in divorce case

A US court has directed Zoho co-founder and chief scientist Sridhar Vembu to furnish a bond worth $1.7 billion in connection with ongoing divorce proceedings, citing concerns over asset movements after the case was initiated and their potential impact on the equitable division of marital property.

According to a court order passed in January 2025, the judge observed that certain transfers of assets undertaken after the divorce petition was filed may have violated automatic temporary restraining orders meant to preserve the marital estate. The order noted that continued movement of assets could hinder the court’s ability to ensure a fair distribution and raise the risk that financial awards in favour of the respondent may not be recoverable.

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The case involves Vembu and his estranged wife, Pramila Srinivasan, who are contesting the division of assets accumulated during their marriage while domiciled in California. Under California family law, property acquired during a marriage is generally treated as community property, regardless of whether the assets are held within or outside the United States, and applies across different forms of ownership.

Vembu relocated to his ancestral village in Tamil Nadu in late 2019 and has since been operating Zoho from India. He initiated divorce proceedings in 2021. In November 2024, Srinivasan filed an ex-parte application seeking court intervention to block a proposed transaction that she argued would transfer a revenue-generating community asset in the US to an external party.

The application referred to a restructuring of Zoho’s US operations. The court reviewed a multi-step transaction under which Zoho Corporation’s US business, previously a wholly owned subsidiary of Chennai-based Zoho Corporation Pvt Ltd and considered part of the marital estate, was proposed to be moved to a separate entity controlled by Tony Thomas, a long-time associate of Vembu.

The court expressed scepticism over the explanations offered for the restructuring, including claims that it was undertaken to mitigate exposure to the US base erosion and anti-abuse tax (BEAT). These justifications were found insufficient based on the evidence presented.

Citing the scale of the assets involved and the risk posed to the respondent’s ability to recover her share at the conclusion of the proceedings, the court held that a substantial bond was necessary. While the petitioner did not provide adequate grounds to support a lower amount, the respondent presented evidence supporting the $1.7 billion figure.

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The court directed Vembu to post the bond within 45 days from January 15, 2025. As of now, there is no publicly available information confirming whether the bond has been furnished.