The co-founder of Zoho, Sridhar Vembu has been accused by his wife of divesting a chunk of his shares in the company and placing it with his sister and her husband, without informing her. Sridhar, the CEO of Zoho, a company that builds software suites and is valued at $ 5 billion is engaged in divorce proceedings with his wife Pramila Srinivasan. The couple were based in California, US, for nearly 25 years before Sridhar decided to move back to Tamil Nadu in early 2020. Sridhar filed for divorce in California in August 2021
According to Forbes, Pramila, in her court filings has claimed that Vembu, in a complex transaction, shifted Zoho’s intellectual property to India. “He decided to make fictitious transfers or ‘sales’ of our most valuable community asset to his family members without their paying any cash or other consideration, and without ever telling me or asking my permission,” she said in a court filing in January.
Pramila’s attorney John Farley, in a statement to Forbes, said that community property law in California does not allow a spouse during marriage to secretly dispose of assets without obtaining the other spouse’s consent. “After all ‘community’ property in effect means jointly owned — a duty to be transparent with your spouse and not to engage in secret transactions to try to evade the 50-50 legal requirement,” he said.
Forbes also reported that, in December 2011, a new company, Zoho Corporation Private Limited, was set up in India by Vembu and his brother-in-law Rajendran Dandapani, according to a memorandum of association, showing them owning 43% and 57%, respectively. But Vembu’s lawyers have maintained that he only ever owned 5% of the India-based company.
According to a capitalisation table filed by Pramila’s lawyers, by the end of 2011, Vembu’s sister Radha got a 49% stake, her husband Dandapani received 34%, Thomas held 8% and Vembu 5%, with three others owning the remaining 4%. Thomas and Vembu sold Zoho’s intellectual property to the new entity ZPCL for $50 million, though it’s unclear how and when the money was paid.
Pramila alleged that Vembu had abandoned her and her son who is on the autism spectrum in 2020. Responding to the allegation, Vembu said, “My wife Pramila and I were in this fight against autism for over 15 years. She is a super mom and her passionate cause is curing our son of autism. I worked hard along with her. To ensure his safety I also took some of his treatments so I could know what they did to him. As our son got older (24 today) I felt the endless treatments he was under were not helping much and he would be better off in rural India, closer to loving people and helping to lift up people. She felt I was giving up. Our marriage collapsed under that stress.”
He also said that the allegations of ownership interest are unfounded. “I will say this unequivocally: I never ever transferred my shares in the company to anyone else. I lived in the US for the first 24 years of our 27-year history and much of what constitutes the company was built in India. That is reflected in the ownership. It is complete fiction to say I financially abandoned Pramila and my son. They enjoy a far richer life than I do and I have supported them fully. My US salary for the last 3 years has been with her, and I gave our house to her. Her foundation also is supported by Zoho.”
He further blamed his uncle (father’s younger brother) for causing a rift in the family. “My uncle Ram from Alaska was estranged from my father and us for decades and we had little or no communication until I invited him to live with us in California a few years ago, purely on compassionate grounds due to his terminal cancer and his lack of family to care for him. Sadly Pramila has chosen to trust my uncle Ram who still lives rent free at our home, due to her own frustration that she feels I abandoned the fight on autism. All I can say is that if I am not serving the causes and people I serve now, my will to live would have left me.”
Vembu went ahead to say that he will survive this ‘messy legal dimension’ just like how he has endured other vicious personal attacks before
“I have always supported Pramila and my son and will continue to support them as long I live. I am confident truth and justice will prevail. I have endured vicious personal attacks before and I will endure this one too. I will continue to build institutions and capabilities in rural India, my only remaining purpose in life. My prayer is that someday my beloved son will join me here. Please pray for us,” he said.
Vembu is an IIT-Madras graduate who moved to the US in 1989 to pursue a PhD programme at Princeton. He met Pramila in graduate school, and they were married in 1993. He co-founded Zoho with Tony Thomas, while Pramila completed her PhD from Purdue University and runs MedicalMine, a company which provides electronic health records. Vembu returned to India in 2020 and Mathalamparai village in Tenkasi district in Tamil Nadu.