The Asterisk Economy

How India Appoints Foreign Executives Without Complying with Indian Law

Every year, Indian companies listed on the National Stock Exchange and Bombay Stock Exchange announce the appointment of foreign nationals to their most senior executive positions. The announcements are confident. The language is fulsome. The press releases speak of global expertise, international networks, and transformational leadership.

And at the foot of every such announcement, in varying typography but invariable meaning, sits a phrase that has become the most consequential piece of boilerplate in Indian corporate governance:

“Subject to regulatory approvals.”

The Laws in Play

Every expat CEO appointment in every regulated Indian sector triggers the following statutory compliance requirements, all of which must be satisfied before assumption of charge:

• Companies Act, 2013 — Schedule V, Part I, Condition (e): 12 continuous months India residency immediately preceding appointment. Applies to every Indian company without exception.
• Companies Act, 2013 — Schedule V, Part I Proviso: Non-resident must enter India only after obtaining a proper Employment Visa from the Indian mission abroad, with full appointment terms disclosed at visa application stage.
• Companies Act, 2013 — Section 196(4): Where appointment is at variance with Schedule V conditions, prior Central Government approval is mandatory before the board resolution takes effect.
• Banking Regulation Act, 1949 — Section 35B: Prior RBI approval mandatory for appointment of any CEO, MD, or full-time director at any bank. Fit and proper vetting required.
• DGCA Civil Aviation Requirement, Section 3 — CAR Series C Part I: Prior DGCA permission and MHA security clearance mandatory before appointment of any foreign national as CEO, CFO, or Chairman at an AOC-holding airline. Denial makes the Air Operator Permit liable to cancellation.
• Bharatiya Vayuyan Adhiniyam, 2024 — Section 1(2): India’s primary aviation statute applies to Indian citizens, persons on Indian-registered aircraft, and persons with principal place of business or permanent residence in India. A foreign national CEO based overseas and not yet resident in India falls outside this statute’s direct personal jurisdiction — placing the head of an Indian airline beyond the reach of the law that governs the industry.

None of these requirements is discretionary. None carries a saving provision that permits announcement before compliance. All require the compliance to precede the appointment, not follow it. And in every regulated sector, for every major expat executive appointment across three decades of Indian economic liberalisation, every one of them has been bypassed by the same mechanism.

This analysis argues that those four words — deployed uniformly, accepted uniformly, and left unscrutinised uniformly across every regulated sector of the Indian economy — constitute a systemic mechanism by which Indian companies, their boards, and their regulators have reached a collective arrangement to treat the law governing the appointment of foreign executives as aspirational rather than mandatory.

It is not a mechanism unique to aviation. It is not unique to any single company or appointment. It is an economy-wide practice — the Asterisk Economy — in which legal requirements that are unambiguous in their text, unambiguous in their sequencing, and formally characterised as mandatory by the regulators themselves are routinely bypassed through a three-word phrase that is taken to substitute for compliance rather than to signal its absence.

Part I: The Universal Gate — What Every Expat CEO Appointment Must Clear

Before any sector-specific regulatory requirement applies, every expat CEO appointed to any Indian company faces a three-part compliance gateway under the Companies Act, 2013. This gateway applies to private companies, public companies, and listed companies alike. It applies in aviation, banking, manufacturing, pharmaceuticals, technology, and every other sector. There are no industry exceptions.

Condition 1: The 12-Month Residency Rule (Schedule V, Part I, Condition (e))

Schedule V of the Companies Act, which governs the appointment of a Managing Director, Whole-Time Director, or Manager, states plainly:

He is resident of India.

Explanation I to Schedule V defines what this means for a foreign national: a continuous stay in India of not less than twelve months immediately preceding the date of appointment, with the purpose of taking up employment or carrying on business in India.

Every expat CEO recruited from an overseas posting — from Amsterdam, Geneva, Singapore, New York, or anywhere else — fails this condition at the time of announcement. That is, definitionally, the nature of an expatriate appointment. The person is abroad. Schedule V Condition (e) is structurally non-compliant with the international recruitment model that every major Indian company in every major sector now uses.

The only legal pathway is Central Government approval under Section 196(4) of the Companies Act, which permits an appointment at variance with Schedule V conditions — but only with prior Central Government sanction, applied for and obtained before the appointment is made.

Condition 2: The Employment Visa Precondition (Schedule V, Part I Proviso)

The Schedule V proviso is unambiguous: a non-resident must enter India only after obtaining a proper Employment Visa from the concerned Indian mission abroad, with the company profile, principal employer identity, and full appointment terms submitted at the visa application stage. If an incoming executive arrives in India on a Business Visa and subsequently converts, the statutory sequence is violated. No saving provision in the Companies Act validates that sequence.

Condition 3: Section 196(5) — The Saving Clause and Its Limits

Section 196(5) states that where an appointment is not approved by the company at a general meeting, any act done before such approval shall not be deemed invalid. This provides legal protection for executive acts before shareholder ratification. But it is expressly “subject to the provisions of this Act” — meaning it cannot override the Central Government approval requirement it is subordinate to. It has no application whatsoever to the Employment Visa condition, to MHA security clearances required in regulated sectors, or to sector-specific prior approval requirements. The saving clause covers one of many compliance requirements. For the others, the law provides no retroactive validation.

Part II: The Sectoral Amplifiers — Additional Gates, Additional Bypasses

On top of the Companies Act baseline, each regulated sector has constructed its own additional pre-clearance architecture for senior executive appointments. In every sector, that architecture carries the same requirement: prior approval before appointment. In every sector, the asterisk mechanism has been used to defer that approval.

Banking: The Hardest Statutory Gate

Under Section 35B of the Banking Regulation Act, 1949, the appointment of a Chair, Managing Director, full-time director, manager, or CEO of any bank requires the prior approval of the RBI. This is not a guideline or a best practice. It is a statutory requirement. The RBI applies fit and proper criteria covering professional background, financial integrity, absence of criminal proceedings, and absence of conflicts of interest. For a foreign national, this additionally requires the RBI to satisfy itself that the appointee’s background across foreign jurisdictions meets the standard.

The consequence of appointing a CEO without prior RBI approval at a bank is categorical — it is a violation of the Banking Regulation Act, carrying penal consequences. Yet bank CEO appointments, including those involving foreign nationals, routinely appear in public announcements with the regulatory approvals qualifier, with the RBI approval process apparently running in parallel or subsequent to the announcement.

Insurance: IRDAI Prior Approval

The IRDAI Corporate Governance Guidelines for Insurers specify that the appointment of a whole-time director, MD, or CEO is subject to IRDAI approval before the appointment takes effect. For a foreign national, this is compounded by the Companies Act Schedule V conditions — meaning the insurance sector expat CEO appointment faces at least five separate pre-conditions, all of which must precede assumption of charge.

Telecom and Other Sectors

The Department of Telecommunications requires MHA security clearance for senior officials of licensed telecom companies. Given the sensitivity of telecom infrastructure — spectrum management, interception capabilities, network architecture — the clearance requirement is arguably more stringent than in aviation. The asterisk mechanism is replicated across the sector.

Part III: The Aviation Case — Where the DGCA Put It in Writing

The most extensively documented example of the asterisk mechanism in operation is the Indian aviation sector. Aviation is chosen not because it is uniquely egregious, but because it is uniquely documented: a formal primary source exists in which the regulator itself characterised the practice as a violation.

DGCA Air Transport Circular No. 03 of 2009: The Regulator’s Own Condemnation

Air Transport Circular No. 03 of 2009, issued on 8th June 2009 by the Joint Director General of Civil Aviation, addressed to all scheduled and non-scheduled operators, states:

“Instances have come to the notice of this office wherein the Operators have inducted Directors in their Board of Directors without obtaining pre-requisite approval from DGCA/MCA which results in violation.”

It then cites CAR Section 3, Series C, Part 3, Para 9.1 in bold:

“Any change in the Board of Directors at any time shall be intimated to the Ministry of Civil Aviation and DGCA along with the details of new chairman or director as per annexure IIIA/IIIB. New chairman and directors shall be appointed only after their security clearance.”

CAR Section 3, Series C, Part 3, Para 9.1 — as quoted in DGCA Air Transport Circular No. 03 of 2009, Ref. AV.14014/GEN/2006-AT.I, dated 8 June 2009

And concludes that prior approval is mandatory before inducting any Director in the Board of Directors.

Three words from this circular demand individual attention. “Violation” — the DGCA’s own characterisation of the asterisk practice. Not irregularity. Not procedural oversight. Violation. “Only” — the word is absolute. No condition subsequent. No deferred compliance. No asterisk. “Mandatory” — the DGCA’s own word for the prior approval requirement. Not recommended. Not customary. Mandatory.

This circular was issued in 2009 — before every expat CEO appointment at every Indian airline that followed. Every board, every legal counsel, every compliance officer was formally notified that the asterisk practice was a regulatory violation. The asterisk was deployed thereafter in deliberate knowledge of that notification.

What happened after this circular was issued? Across the seventeen years between 2009 and 2026, the answer is documented: nothing. The circular was filed. The violations continued. The DGCA, having formally named the practice a violation in 2009, proceeded to accept it without public enforcement action in every subsequent expat CEO appointment at every Indian airline.

The Aviation CEO Record After 2009

In every case, the appointment was made with knowledge of the 2009 circular. In every case, the twelve-month India residency condition was unsatisfied at announcement. In every case, the asterisk qualifier appeared. In no case is there a public record of the full compliance stack — Employment Visa, MHA clearance, DGCA prior permission, Central Government approval — being completed in the mandated sequence before the announcement.

The Current Live Case: Willie Walsh at IndiGo

On 31st March 2026, InterGlobe Aviation Limited announced the appointment of William Walsh — Director General of IATA, based in Geneva — as CEO of IndiGo, “subject to regulatory approvals.” Walsh has not resided in India for twelve continuous months preceding the announcement. There is no public record of prior DGCA permission being obtained before the board resolution. There is no public record of MHA security clearance having been obtained.

The Walsh appointment carries additional significance because it follows IndiGo’s catastrophic December 2025 operational collapse, for which the DGCA formally reprimanded the airline for “inadequate overall oversight of flight operations and crisis management.” An airline under regulatory censure for governance failure is appointing its successor CEO through a process that itself demonstrates governance failure. That is the Asterisk Economy in its purest expression.

The BVA Jurisdictional Gap: The Accountability Void No One Is Discussing

Beyond the Companies Act compliance failures, the Walsh appointment exposes a jurisdictional gap specific to Indian aviation law that has received no public attention. The Bharatiya Vayuyan Adhiniyam, 2024 — India’s primary aviation statute, which replaced the Aircraft Act, 1934 and came into force on 1st January 2025 — specifies its jurisdictional reach in Section 1(2). It applies to:

• Citizens of India wherever they may be
• Persons on Indian-registered aircraft wherever they may be
• Foreign aircraft and persons on them, in or over India
• Persons who are not Indian citizens but have their principal place of business or permanent residence in India

Walsh, as an Irish national based in Geneva as IATA’s Director General, satisfies none of these limbs at the time of the 31st March 2026 announcement. Until he physically relocates to India and establishes his principal place of business here — which cannot happen before 3rd August 2026 at the earliest — he falls outside the direct personal jurisdictional reach of India’s primary aviation statute.

This is not a technical formality. The BVA is the statute under which the DGCA exercises its core enforcement powers: issuing directions, imposing penalties up to Rs.1 crore, suspending or cancelling licences and certificates, and ordering operational restrictions. An airline CEO who sits outside all four limbs of Section 1(2) is, for the period they remain overseas, beyond the reach of every one of these enforcement tools. The person announced as CEO of India’s largest airline is unreachable by the primary enforcement instrument of the Indian aviation state.

During the four-month gap between the 31st March announcement and the 3rd August joining date, Walsh will be involved in strategic decisions about IndiGo’s operations, fleet, routes, and management structure. Those decisions will influence an airline carrying 65% of India’s domestic passengers. The person making them will be, for regulatory accountability purposes, beyond the reach of the statute that governs the industry — and beyond the reach of the DGCA that governs the statute.

The Bharatiya Nyaya Sanhita, 2023 provides a partial backstop — it applies criminal accountability to any person on Indian soil or on Indian-registered aircraft. But the BNS is a criminal instrument, not a regulatory one. The DGCA does not issue show-cause notices under the BNS. It does not impose operational restrictions under the BNS. It does not cancel Air Operator Certificates under the BNS. All of those tools flow from the BVA. An expat CEO directing decisions from outside India sits precisely in the gap between regulatory accountability and criminal accountability — reachable by neither instrument in real time.

Part IV: How the Asterisk Economy Operates — Five Mechanisms

Mechanism 1: Fait Accompli Before Compliance

The public announcement creates commercial and reputational reality before compliance is complete. Share prices react. Media reports the appointment as done. By the time any regulatory authority considers the pending clearances, the commercial reality of the appointment is already established. The regulator faces the choice of disrupting that reality — and accepting market, reputational, and political consequences — or approving the clearance retrospectively. The regulator consistently chooses the latter. The asterisk is designed to create exactly this choice.

Mechanism 2: Preconditions Recharacterised as Afterthoughts

Across every statute and every sector, the language of pre-appointment compliance is unambiguous. “Prior” approval. Appointment “only after” clearance. The asterisk mechanism converts these conditions precedent into conditions subsequent — allowing the appointment to arise immediately and be formalised later. No statute in India authorises this conversion. The asterisk asserts that it is authorised. Regulatory inertia confirms it.

Mechanism 3: Disclosure Without Substance

SEBI’s LODR framework requires listed companies to disclose material events including Key Managerial Personnel appointments. The asterisk mechanism satisfies the form of this obligation while defeating its substance. A shareholder cannot determine which approvals are outstanding, whether any have been applied for, what happens if any are denied, or whether the board obtained required prior permissions before passing the resolution.

Mechanism 4: An Unblemished Record of Approvals Being Granted

Across thirty years of expat senior executive appointments in regulated Indian industries, the asterisk mechanism has been used uniformly. The approvals have, with very rare exceptions, ultimately been granted. The clearances have been obtained after the announcement, and the sequencing violation has been retroactively cured. This empirical record is self-reinforcing: the more consistently the approvals are granted after announcement, the more the asterisk is perceived as genuine procedure rather than bypass.

Mechanism 5: Protecting the Appointing Entity, Not the Public

The compliance requirements that the asterisk bypasses were not designed to protect the companies that deploy the asterisk. They exist to protect the public — depositors, passengers, policyholders, shareholders — who depend on entities that hold public funds, serve public passengers, and are listed on public stock exchanges. The asterisk allows the appointing entity to claim the commercial benefits of the appointment without completing the compliance steps that exist for the public’s protection. The entity’s interests are served. The public’s are deferred.

Part V: The Institutional Architecture of Non-Enforcement

The Asterisk Economy does not persist because companies are willing to violate the law. It persists because the institutions responsible for enforcing the law have made a collective and sustained choice not to do so.

The Ministry of Corporate Affairs has never publicly taken action against any major Indian company for announcing a Schedule V-non-compliant appointment before obtaining Central Government approval under Section 196(4). The approval process is entirely opaque. There is no public registry of 196(4) applications, no timeline disclosure, and no public record of any application being refused.

The DGCA formally characterised the asterisk practice as a violation in 2009 and has not enforced that characterisation in a single publicly documented case in the seventeen years since. It issued a circular. It watched the circular be ignored. It issued no penalties and took no enforcement action.

The Reserve Bank of India requires prior approval for bank CEO appointments under Section 35B of the Banking Regulation Act. Whether that approval precedes or follows public announcements at private sector banks is not publicly disclosed.

SEBI has accepted the regulatory approvals qualifier as a sufficient disclosure of a material appointment at every listed company that has used it. It has not required companies to disclose which approvals are outstanding, whether applications have been filed, or what the legal consequences of non-obtainment are.

The BVA and the Accountability Vacuum compound the problem further. The Bharatiya Vayuyan Adhiniyam, 2024 does not apply to a foreign national CEO based overseas until they establish principal place of business or residency in India. During the gap between public announcement and physical assumption of charge in India, the DGCA’s entire enforcement toolkit under the BVA is unavailable against the named CEO. No institution has publicly acknowledged this gap, let alone proposed a mechanism to close it.

The result is a regulatory ecosystem in which five separate institutions — each with enforcement powers sufficient to address the asterisk mechanism — have each separately chosen not to use those powers. No single institution has been the last line of defence. Each has relied on the others to act. None has. And in aviation, the BVA creates a sixth gap that none of them is equipped to address: the accountability void between announcement and residency.

Part VI: What the Courts Have Not Been Asked

Indian courts have the jurisdiction, the precedent, and the legal framework to challenge appointments made through the asterisk mechanism.

The NCLAT has held in Vijaya Hospital C. Kity & Resorts & Ors. v. Sibi C.K & Ors. that procedurally defective executive appointments constitute oppression under Sections 241-242 of the Companies Act. The NCLT has accepted jurisdiction over challenges to illegal directorial appointments and declared such appointments non-est and void. High Courts have Article 226 jurisdiction over regulatory compliance failures. The Supreme Court has PIL jurisdiction on public interest grounds.

Three avenues exist for challenge: NCLT petition by a minority shareholder alleging mismanagement; High Court writ petition challenging a regulator’s failure to enforce its own prior-approval requirements; and Supreme Court PIL on grounds that unvetted or improperly sequenced executive appointments at systemically important regulated entities create public risk.

None of these avenues has been used. The Asterisk Economy operates in a judicial vacuum — not because the courts cannot act, but because no petitioner with standing has yet chosen to act.

Part VII: What Must Change

1. The Companies Act must be enforced — Section 196(4) Central Government approval for Schedule V-non-compliant appointments should be obtained before, not after, the board resolution. The MCA should establish a public registry of 196(4) applications and their outcomes. The process must be transparent.
2. SEBI must require substantive disclosure — The SEBI LODR framework should be amended to require companies to disclose, at the time of any Key Managerial Personnel announcement, which specific regulatory approvals are outstanding, whether applications have been filed, and what the legal consequences of non-obtainment are.
3. The DGCA must enforce its 2009 circular — Seventeen years of non-enforcement have made the 2009 circular meaningless. The DGCA should either enforce it — requiring demonstrated prior permission before any board resolution appointing a new CEO at an AOC-holding airline — or formally revise the CAR to reflect what it actually requires.
4. The RBI must make its CEO approval process transparent — Whether RBI approval for bank CEO appointments is obtained before or after public announcements is not public information. The RBI should require banks to disclose the status of CEO approval applications at the time of any public announcement of senior executive appointments.
5. Listed company boards must act on their fiduciary duties — When a listed company announces the appointment of a foreign national as CEO subject to regulatory approvals, that disclosure should specify what approvals are required, their legal basis, whether applications have been filed, and what the consequences of non-obtainment are. An asterisk without substance is not disclosure.

Conclusion: The Economy of the Asterisk

India’s economy is the world’s fifth largest. Its regulated industries — banking, insurance, aviation, telecommunications — collectively serve hundreds of millions of people and manage trillions of rupees in assets, deposits, and infrastructure. The quality of executive leadership in these industries matters enormously, not just commercially but from the standpoint of public safety, financial stability, and regulatory accountability.

The Companies Act, the Banking Regulation Act, the Bharatiya Vayuyan Adhiniyam, and the sector-specific regulatory frameworks governing each of these industries all contain requirements designed to ensure that senior executive appointments — and particularly the appointment of foreign nationals — are made through a process that satisfies the law before the appointment takes effect, not afterwards.

The Asterisk Economy has dismantled that process — not through legislative change, not through judicial order, and not through any public policy decision. It has dismantled it through the collective, sustained, and unremarked decision of Indian companies, their boards, their regulators, and their disclosure frameworks to treat four words — “subject to regulatory approvals” — as a substitute for compliance rather than an acknowledgment of its absence.

The DGCA said the same thing in 2009, in a government circular addressed to every scheduled and non-scheduled airline operator in India, using the words mandatory, violation, and only after. And then did nothing about it for seventeen years. That pattern is replicated, without a primary source document as convenient as a DGCA circular, across banking, insurance, and every other regulated sector in India.

That is the Asterisk Economy. It will remain a feature of Indian corporate governance until the institutions responsible for the law choose to enforce it, or until the courts compel them to.

India’s regulated industries, and the citizens who depend on them, deserve better than an asterisk.

This analysis is based entirely on publicly available statutory materials, DGCA Civil Aviation Requirements, National Company Law Tribunal and Appellate Tribunal orders, exchange filings, regulatory circulars, press releases, and media reports. No confidential information has been used or sought. The author is Capt Amit Singh FRAeS, Founder, Safety Matters Foundation (safetymatters.co.in). The Foundation is an independent aviation safety NGO advocating for evidence-based regulatory oversight in India. The views expressed are those of the author and the Foundation, and do not represent the position of any regulatory authority, airline, court, or company. IMPORTANT DISCLAIMER: No allegation of criminal conduct, financial crime, fraud, corruption, or dishonest intent is made against any individual or company named in this analysis. The analysis is directed entirely at regulatory processes, statutory compliance frameworks, and corporate governance practices — not at the personal integrity, character, or motives of any named individual or organisation. The term “laundering” as used in this analysis refers exclusively to the analytical function of the asterisk mechanism as a device for regulatory arbitrage — that is, a method of presenting non-compliant practice in a form that appears procedurally legitimate. It does not carry, and is not intended to carry, any connotation of financial crime, money laundering, or any criminal offence as defined under the Prevention of Money Laundering Act, 2002, the Bharatiya Nyaya Sanhita, 2023, or any other statute. References to regulatory “violations,” “non-compliance,” and “bypasses” are used in their ordinary administrative and corporate governance sense, as characterisations of departures from statutory requirements. They do not constitute allegations of criminal conduct. This analysis constitutes fair comment on matters of substantial public interest — specifically, the governance of regulated entities serving hundreds of millions of Indian citizens — and is published in the discharge of the Foundation’s stated public interest mandate. All factual claims are supported by cited primary sources. Readers who believe any factual claim is inaccurate are invited to contact the Foundation at safetymatters.co.in with supporting documentation.

Statutory & Regulatory References

Companies Act, 2013 (Act No. 18 of 2013), Sections 196(4), 196(5), 197, 203, 241, 242, 430; Schedule V Part I Condition (e), Explanation I and Proviso

Banking Regulation Act, 1949, Section 35B — Prior Approval for CEO/MD/Chairman Appointment

Bharatiya Vayuyan Adhiniyam, 2024 (Act No. 16 of 2024), Section 1(2) — Extent and Application

Bharatiya Nyaya Sanhita, 2023 (Act No. 45 of 2023), Sections 1(3), 1(5) — Jurisdiction

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Regulation 30

DGCA Air Transport Circular No. 03 of 2009, dated 8 June 2009, Ref. AV.14014/GEN/2006-AT.I — Induction of Directors; Mandatory Prior Approval; CAR Section 3, Series C, Part 3, Para 9.1

DGCA Civil Aviation Requirement, Section 3 — Air Transport, Series C Part I (Scheduled Services) — MHA Security Clearance and Prior Permission Requirements

RBI Guidelines on Ownership and Governance in Private Sector Banks (2005, as amended)

RBI (Acquisition and Holding of Shares or Voting Rights in Banking Companies) Directions, 2023

BCAS Aviation Security (AvSec) Order, January 2011 — Airport CEO Indian Nationality Requirement

Aircraft Rules, 1937, Rules 133A, 134, 134A — Air Transport Permit Requirements

Judicial References

Vijaya Hospital C. Kity & Resorts & Ors. v. Sibi C.K & Ors. — NCLAT (Procedurally defective CMD appointment constitutes oppression)

MAIF Investment India PTE Ltd. v. Ind-Barath Power Infra Limited & Ors. — NCLAT (Exclusive jurisdiction of NCLT under Section 430)

NCLT Hyderabad Bench — CP No. 31/241/HDB/2022 (Illegal MD appointment challenged; declared void)

Constitution of India, Article 226 — High Court writ jurisdiction over regulatory administrative decisions