Zoho founder asked to post $1.7 billion bond in divorce asset dispute, US Court’s 2025 order shows

A US court has directed Zoho founder Sridhar Vembu to post a $1.7 billion bond in an ongoing divorce case, citing concerns over post-petition asset movements and the potential impact on the division of marital property.

As first reported by The News Minute, in the order passed in January 2025, the court 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 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.

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The court also 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.

Sridhar Vembu and his estranged wife, Pramila Srinivasan, are locked in divorce proceedings in the United States, and the dispute has primarily centred on the division of marital assets accumulated during their marriage.

The divorce proceedings centre on the division of marital assets acquired during the couple’s marriage while they were domiciled in California. California law treats property acquired during the marriage as jointly owned, regardless of where those assets are held.

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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. His estranged wife Pramila moved an ex-parte application in November 2024 seeking judicial intervention to halt a proposed transaction that, 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. The court examined a multi-step transaction through which the business of Zoho Corporation in the United States, 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 long-standing associate of Sridhar Vembu.

The case has drawn scrutiny over the movement of assets after the petition was filed, with the court flagging 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 rejected the explanations put forward for certain transactions involving Vembu, Zoho, and T&V Holdings Inc. The stated reasons, including the claim that the restructuring was undertaken to avoid exposure to the US base erosion and anti-abuse tax (BEAT), were found to be unconvincing.

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 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.

The court directed Vembu to post the $1.7 billion bond within 45 days from January 15, 2025, however, there is no concrete information to suggest the bond was posted.