Foreign investment is limited to 30% in domestic commercial banks and limited to 70% in investment banks, Islamic banks, insurance companies and takaful operators. The legislation does not specifically provide for such restrictions. The Minister of Finance and/or the Central Bank may impose limits to foreign shareholding as part of the lincensing process. As has been publicy announced, the current policy is to impose the mentioned foreign equity restrictions. Such policies are not formally published, but have been announced and practioneers seem to confirm that such restrictions apply (see below). 
---------------------
"Banking regulation in Malaysia: overview [...]
Foreign investment
22. Are there specific restrictions on foreign shareholdings in banks?
Foreign shareholdings of up to 70% are allowed in domestic Islamic banks which have a paid-up capital of at least US$1 billion and up to 70% for investment banks. The permissible foreign shareholding for commercial banks is 30%. These limits do not apply to international Islamic banks, "grandfathered" banks (banks which were granted licenses under the now-repealed predecessor statutes to the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA)), pre-existing foreign-owned banks and those which were granted licences immediately following the liberalisation of the financial sector in 2009." (Azman bin Othman Luk, Karen Foong and Elaine Heung, Rahmat Lim & Partners (2017), "Banking Regulation in Malaysia: Overview", Practical Guide: Banking Regulation: Global Guide 2017/18, Thomson Reuters.)
"KUALA LUMPUR, March 23 [2011] (Reuters)  - Malaysia's central bank chief Zeti Akhtar Aziz said on Wednesday the threshold for foreign ownership of local banks remained at 30 percent but this cap may be reviewed on rare occasions. "At this point in time the threshold is 30 percent and that threshold remains for now because we want a core of domestic banks within our financial system (to facilitate) financial inclusion," Zeti told reporters."[...] Zeti added that Bank Negara may "from time to time" consider breaching the threshold, but it would be on a very rare occasion. [...] (Reporting by Min Hun Fong; editing by Liau Y-Sing)" (Press Article, "Malaysia's c.bank says 30pct foreign ownership of banks stands", Reuters Staff, March 23, 2011 / 11:10 AM).
"PRESS STATEMENT: LIBERALISATION OF THE FINANCIAL SECTOR
[...]
Flexibility will be accorded for an increase in the foreign equity limits from 49% to 70% of investment banks, Islamic banks, insurance companies and takaful operators. Such alliances will strengthen business potential and enhance growth prospects of financial institutions through the international expertise and global networks of foreign shareholders. The foreign equity limit for domestic commercial banks will remain at the current 30%;[...]" (Government of Malaysia (2009), "Liberalisation of the Services Sector", Prime Minister's Office press release, 22 April 2009)
---------------------------
"Calendar of Events: April – June 2009 [...]
Highlights of the measures to liberalise Malaysia's financial services industry:[...]
II. Increase in foreign equity limits -- Raising of foreign equity limit in domestic Islamic banks, investment banks, insurance companies and takaful operators from 49% to 70% with immediate effect. A higher foreign equity limit beyond 70% for insurance companies will be considered on a case-by-case basis for players who can facilitate consolidation and rationalization of the insurance industry.[...]" (Bank Negara Malaysia (2009), Economic and Financial Developments in the Malaysian Economy in the Second Quarter of 2009, Quaterly Bulletin, p. 73)
---------------------------
"PART III - AUTHORIZATION AND REGISTRATION
Division 1 - Authorized business   
Authorized business to be carried on by authorized person
8.(1) No person shall carry on any authorized business unless it is— (a) licensed by the Minister, on the recommendation of the Bank, under section 10 to carry on banking business, insurance business or investment banking business; or (b) approved by the Bank under section 11 to carry on any of the businesses set out in Division 1 of Part 1 of Schedule 1. 
[...]
Application for authorization
9. An applicant for a licence under section 10 or an approval under section 11 to carry on an authorized business shall submit the application in writing to the Bank together with such documents or information as may be specified by the Bank.
Grant of licence by Minister
10.(1) In assessing an application duly made under section 9 to carry on any licensed business, the Bank shall have regard to all the factors set out in part 1 and Part 2 of Schedule 5 and such other matters that the Bank considers relevant. 
(2)   Upon making an assessment under subsection (1) and where the Bank is satisfied that such applicant may be granted a licence, the Bank shall make a recommendation to the Minister to grant a licence under subsection (4) with or without conditions.
[...]
Approval by Bank
11.(1) In assessing an application duly made under section 9 to carry on any approved business, the Bank shall have regard to all the factors set out in Part 1 of Schedule 5 and such other matters that the Bank considers relevant. 
[...]
PART VI - OWNERSHIP, CONTROL AND TRANSFER OF BUSINESS [...]
Acquisition of interest in shares requiring approval
87.(1) Subject to section 92 and except with the prior written approval of the Bank, no person— (a) shall enter into an agreement or arrangement, to acquire any interest in shares of a licensed person by which, if the agreement or arrangement is carried out, he would hold (together with any interest in shares of that licensed person which are already held by such person) an aggregate interest of five per cent or more in the shares of the licensed person; or [...]
(2)   Notwithstanding subsection (1), no person shall enter into an agreement or arrangement to acquire any interest in shares of a licensed person by which, if the agreement or arrangement is carried out, he would hold (together with any interest in shares of that licensed person which are already held by such person) an aggregate of more than fifty per cent of the interest in shares of the licensed person, without obtaining the prior written approval of the Minister, on the recommendation of the Bank. 
[...]
Control over licensed person prohibited in some cases 
88.(1) Subject to subsection (2), no person shall have control over a licensed person, unless such person obtains the prior written approval of the Minister, on the recommendation of the Bank. 
[...]
Disposal of interest in shares requiring approval 
89. Except with the prior written approval of the Minister, on the recommendation of the Bank, no person who has an aggregate interest in shares of a licensed person of— (a) more than fifty per cent; or (b) fifty per cent or less but has control over the licensed person, shall enter into an agreement or arrangement to dispose any interest in shares of a licensed person by which, if the agreement or arrangement is carried out, such disposal would result in the person holding an interest in shares of less than fifty per cent or in any way ceasing to have control over the licensed person. 
Application procedures for section 87, 88 or 89 90.
(1) An application for an approval of— (a) the Bank under subsection 87(1); or (b) the Minister under subsection 87(2) or 88(1), or section 89, as the case may be, shall be made by submitting the application to the Bank together with such documents or information as may be specified by the Bank. 
(2) In assessing the suitability of an applicant for the purposes of— (a) granting an approval of the Bank under subsection 87(1); or (b) recommending to the Minister under subsection 87(2) or 88 (1), the Bank shall take into consideration matters that the Bank considers relevant including any of the factors set out in Schedule 6, and any standards as may be specified by the Bank under subsection 91(1). 
[...]
Power of bank to specify standards on shareholder suitability
91.(1) The Bank may specify standards on shareholder suitability to give full effect to Schedule 6.
[...]
SCHEDULE 5 [Sections 10 and 11]  - FACTORS FOR CONSIDERATION IN ASSESSING APPLICATION FOR LICENCE UNDER SECTION 10 OR APPROVAL UNDER SECTION 11 [...]
7.   Whether the application will be in the best interest of Malaysia, having regard to—
(a) the effect of the investment on the level and nature of economic activity in Malaysia, including the effect on productivity, efficiency and quality of financial services; 
(b) the contribution towards enhancing international trade and investment linkages between Malaysia and other countries; 
(c) the effect of the investment on the stability of the financial system, including on conduct and behaviours that could pose a risk to the financial system; or 
(d) the degree and significance of participation of Malaysians in the financial sector. 
[...]
SCHEDULE 6 [Subsections 90(2), 91(1) and 112(2)] - FACTORS FOR CONSIDERATION IN ASSESSING SHAREHOLDER SUITABILITY [...]
6. Whether the application will be in the best interest of Malaysia, having regard to—
(a) the effect of the investment on the level and nature of economic activity in Malaysia, including the effect on productivity, efficiency and quality of financial services; 
(b) the contribution towards enhancing international trade and investment linkages between Malaysia and other countries; 
(c) the effect of the investment on the stability of the financial system, including on conduct and behaviours that could pose a risk to the financial system; or 
(d) the degree and significance of participation of Malaysians in the financial sector. [...]" (Financial Services Act 2013 [Act 758])
---------------------------------
"1 Introduction
1.1  Pursuant to section 10 of the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA), Bank Negara Malaysia (the Bank) shall assess an application for a licence to carry on banking business, Islamic banking business, insurance business, takaful business or investment banking business, having regard to relevant factors including prudential requirements and whether the application will be in the best interest of Malaysia.
1.2 This policy document aims to set out the application and assessment process for– (a) prospective applicants under section 10 of the FSA to obtain a licence to carry on: (i) banking business; (ii) investment banking business; (iii) life business; (iv) general business; or (v) professional reinsurer business; or (b) prospective applicants under section 10 of the IFSA to obtain a licence to carry on: (i) Islamic banking business; (ii) international Islamic banking business; (iii) family takaful business; (iv) general takaful business; (v) professional retakaful business; or (vi) international takaful operator business. 
[...]
4 Effective Date
4.1 This policy document comes into effect on 27 December 2019. 
[...]
8 Considerations under the law
8.1 Pursuant to section 10 of the FSA and IFSA, in assessing an application to carry on any licensed business under the respective Act, the Bank shall consider all the factors set out in Part 1 and Part 2 of Schedule 5 of the FSA or IFSA, and such other matters that the Bank considers relevant. [...]
8.3 The factors set out in Schedule 5 of the FSA or IFSA are as follows– [...](h) whether the application will be in the best interest of Malaysia, having regard to– (iv) the degree and significance of participation of Malaysians in the financial sector; and  
[...]
Form of Establishment
9.4 Subject to paragraph 9.5, all licensed persons are required to be public companies incorporated in Malaysia under the Companies Act 20165.
9.5 A professional reinsurer, a professional retakaful operator, a licensed international Islamic bank, and a licensed international takaful operator may be established as a branch of a foreign institution. [...]" (Bank Negara Malaysia (2019), "Application Procedures for New Licences under Financial Services Act 2013 and  Islamic Financial Services Act 2013" , BNM/RH/PD 030-4, December 27)
---------------------------------
"8 Factors for consideration in assessing shareholders [...]
8.4 The presence of strong and well-managed domestic banking institutions is important for the stability of the financial system and its orderly growth and development. In this respect and in consideration of the factors set out in Schedule 6 of the FSA and IFSA, the Bank will review whether the application will be in the best interest of Malaysia, including the degree and significance of Malaysian participation in the financial sector. In this regard, preference will be accorded to an application where the controlling equity interest in the proposed licensed digital bank are held by Malaysians. [...]" (Bank Negar Malaysia (2020), "Licensing Framework for Digital Banks",BNM/RH/PD 030-12, 31 December)
Government of Malaysia (2009), "Liberalisation of the Services Sector", Prime Minister's Office press release, 22 April 2009.
Bank Negara Malaysia (2009), Economic and Financial Developments in the Malaysian Economy in the Second Quarter of 2009, Quaterly Bulletin, p. 73.
Financial Services Act 2013 [Act 758]
Bank Negara Malaysia (2019), "Application Procedures for New Licences under Financial Services Act 2013 and  Islamic Financial Services Act 2013" , BNM/RH/PD 030-4, December 27
Bank Negar Malaysia (2020), "Licensing Framework for Digital Banks",BNM/RH/PD 030-12, December 31.
[<a href="http://www.pmo.gov.my/home.php?menu=news&news_id=44&news_cat=4&page=1729&sort_year=2009&sort_month=04">Press</a>],[<a href="http://www.bnm.gov.my/files/publication/qb/2009/Q2/p00.pdf">Bulletin</a>],[<a href="https://www.bnm.gov.my/documents/20124/820862/Financial+Services+Act+2013.pdf">Act</a>],[<a href="https://www.bnm.gov.my/documents/20124/938039/PD+030-4_Licensing+Guide_FDI_FSA-IFSA.pdf/3ddc8322-3358-a22c-b751-2d4ab1e33e96?t=1592251348473">Procedures</a>],[<a href="https://www.bnm.gov.my/documents/20124/938039/20201231_Licensing%20Framework%20for%20Digital%20Banks.pdf">Framework</a>],[<a href="http://www.reuters.com/article/malaysia-banks/malaysias-c-bank-says-30pct-foreign-ownership-of-banks-stands-idUSL3E7EN1LZ20110323">Other</a>],[<a href="https://uk.practicallaw.thomsonreuters.com/w-008-0538?transitionType=Default&contextData=(sc.Default)">Other</a>]