Governor Vajubhai R Vala had given his assent to Shetty's appointment yesterday after the government replied to clarifications sought by him.
Earlier, the governor had returned the file seeking some clarifications, reportedly following allegations that Shetty's family owned sites in violation of norms.
The post of Karnataka Lokayukta has been vacant for more than a year now following the resignation of Y Bhaskar Rao in December 2015 over an alleged bribery scandal involving his office and son.
Vala in the past had twice sent back the recommendations made for the post of Lokayukta on various grounds.
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