California community property law explained and why it plays a crucial role in the Sridhar Vembu divorce and Zoho asset dispute.
At the centre of the Sridhar Vembu divorce dispute lies a concept unfamiliar to many Indian readers: California’s community property law.
Under California law, any asset acquired during marriage is presumed to be jointly owned, regardless of whose name it is held in. This means that business stakes, intellectual property, and financial gains accumulated during the marriage are typically divided 50:50 in the event of divorce.
Pramila Srinivasan’s legal argument hinges on this principle. She has alleged that significant restructuring of Zoho’s ownership, which reduced Sridhar Vembu’s personal stake to around 5 percent, occurred during the marriage without her knowledge or consent. If proven, such transfers could be deemed violations of marital property rights.
Vembu’s legal team strongly disputes this. His lawyers argue that the restructuring was a legitimate business decision completed over a decade ago, long before divorce proceedings began, and that no assets were secretly moved after the marriage broke down.
The California court’s decision to demand an unprecedented bond was based on concerns that assets might be placed beyond its reach before a final settlement. Whether that concern is legally justified remains under appeal.
To fully grasp why Zoho’s ownership structure is being scrutinised so closely, one must revisit how the company was built and how its shareholding evolved over time.
