From the Comprehensive Rules 4.0:

During the regroup phase, players may perform regroup actions (special abilities on cards in play with “Regroup:” and events with that keyword) using the action procedure. When all players consecutively pass, proceed to reconcile the Shadow players’ hands.

Shadow players reconcile

Each Shadow player must reconcile his hand to eight cards, as follows:

• He may first discard one card from his hand.
• If he then has less than eight cards in his hand, he must draw cards until he has eight.
• Otherwise (when he has more than eight cards in his hand), he must discard from his hand until he has only eight.

Free Peoples player chooses

At the end of the regroup phase, if you are the Free Peoples player, you must select one of the following two choices:

• Move the fellowship to the next site (allowing the proper Shadow player to place a new site if needed), add tokens to the twilight pool (for the Shadow number of the new site, the region of that site, and the number of companions in the fellowship), and return to the Shadow phase(s).
• Or, reconcile your hand (just as the Shadow players did above). Then the Shadow players discard all minions in play (and cards borne by them), and your turn ends.